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August proved to be one of the most difficult months for the crypto market, marked by a significant decline in the total market capitalization, which fell to a six-month low of $1.96 trillion, amid what analysts called “Black Monday.”
This downturn saw Bitcoin (BTC) plummet from $68,000 to around $49,000, raising concerns among bullish investors. However, market expert Lark Davis suggests that the choppy sideways price action could soon come to an end, paving the way for a potential upside as bullish factors align for the fourth quarter.
Last chance to buy at discounted prices?
In a recent one post on social mediaDavis emphasized that the next three to four weeks could be a last chance for investors to acquire their favorite cryptocurrencies at discounted prices.
Both Bitcoin and Ethereum (ETH) have seen notable declines over the past week, with losses of 6.7% and 5.7% respectively. Of the cryptocurrencies Davis sees as particularly attractive, Solana (SOL) fits this bill as it is currently trading around $129, down almost 16% over the same period.
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Despite these tempting prospects, historical data shows that September is generally a challenging month for BTC. Analysis shows that Bitcoin has ended September in the red in six of the past seven years, with an average loss of around 4.5%.
If this trend continues, some analysts predict that Bitcoin could fall to around $55,000 by the end of the month. This could have a ripple effect on the cryptocurrency market, as other tokens often mirror Bitcoin’s price movements.
An important catalyst for the recovery of the crypto market
Adding to the complexity of the current market landscape are the upcoming interest rate decisions that could significantly impact Bitcoin’s short-term volatility and long-term trajectory, as Bitcoinist reported on Monday.
According to the report, a potential 25 basis point cut by the Federal Reserve could signal the start of an easing cycle, potentially increasing liquidity and fueling long-term price appreciation for Bitcoin.
On the other hand, a 50 basis point cut could trigger an initial price spike followed by a correction recession fears come up again. Bitfinex’s recent report warns that a rate cut could lead to a 15-20% drop in Bitcoin’s price, with projections pointing to a low between $40,000 and $50,000.
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Despite the potential for near-term volatility, a notable bullish development could support Davis’ bullish outlook. The expected payment of $16 billion in cash from FTX to its customers can inject significant capital back into the market.
Analysts believe that a significant portion of this payout will likely be reinvested in cryptocurrencies including Bitcoin and Solana, creating significant buying pressure through the latter part of the year.
Ultimately, the potential inflow of capital from the FTX distribution, combined with the expected cyclical rise of the crypto market in the year of Bitcoin Halving event, could lead to significant gains for several tokens and an overall increase in market capitalization.
Featured image of DALL-E, chart from TradingView.com