What to Anticipate from Bitcoin in September Amid Declining Network Activity

Bitcoin’s rebound on Tuesday may provide temporary relief for investors, yet analysts caution that a prolonged “cooling-off phase” might be underway.

Decreasing on-chain activity coupled with ongoing institutional outflows suggests that the market may be entering a more cautious era after an impressive surge to record levels.

On-chain statistics indicate a notable decline in network activity, which correlates with Bitcoin’s recent price retraction, as highlighted by Glassnode in a formal Telegram update this Tuesday.

The monthly average of change-adjusted transfer volume has decreased by 13%, dropping from $26.7 billion to $23.2 billion.

Should this trend persist, and the metric falls below its yearly average of $21.6 billion, it would “validate weakening speculative activity and indicate a broader decline in demand,” as noted by Glassnode.

As of now, Bitcoin is trading at $111,300, up 2.52% from Monday’s low of $108,550, according to CoinGecko. However, it remains over 10% down from its peak of $124,128 on August 14.

The slowdown in Bitcoin’s performance coincides with heightened sell-side pressure from long-term holders.

The realized profit amongst these investors is the second highest compared to past cycles, indicating a “strong signal that the market is in a late-stage phase,” Glassnode stated in a separate post on X.

“It appears we are entering a cooling-off phase that could persist through September,” Georgii Verbitskii, a derivatives trader and founder of DeFi platform TYMIO, remarked to Decrypt.

Outflows from Bitcoin spot exchange-traded funds, coupled with increased macroeconomic risks, are intensifying bearish sentiment, according to insights from Ecoinometrics, a crypto macro research newsletter, noted on Tuesday.

“As of Friday, our flows-to-price model projected the expected price at $107,000, with the possibility of falling below the psychological $100,000 mark if outflows continue.”

Verbitskii from TYMIO shares a similar perspective, suggesting that a $100,000 target is “on the table,” even with his long-term bullish outlook.

Considering Bitcoin’s declining fundamentals, alongside macroeconomic uncertainty and expectations for rate cuts, market analysts are proceeding with caution.

September, specifically, has historically shown an average return of -3.77% over the past 12 years, with negative returns typically recorded in the third quarter, as per data from CoinGlass.

With more downside potential, Verbitskii advised against initiating new long positions at the current levels and recommended adopting a “wait and see” strategy.

“Long positions are only justifiable if we reclaim and hold above $118,000.”