IS AUGUST A DOWNTREND MONTH FOR THE CRYPTOCURRENCY MARKET
Welcome to yet another article of Boztech where we discuss the cutting edge of digital finance where cryptocurrency isn’t just a buzzword, it’s a transformative force in the world of investments. As the crypto market continues to evolve, staying informed with the latest updates and insights is important for navigating this volatile yet lucrative landscape.
These days trading in cryptocurrency can be a powerful source of passive income, yet success in this arena hinges on more than just buying and selling. Mastering the art of reading market graphs, understanding trading strategies, and discerning bullish and bearish trends is essential. Which is why Boztech is here to help you out! Keep reading till the end.
A historic august-dip for cryptomarkets
August has traditionally been a challenging month for cryptocurrency markets, often characterised by reduced activity and declining values. Analysts David Duong and David Han from Coinbase note that August usually sees a downturn, as evidenced in August 2023, when Bitcoin spot volumes fell by 19% and futures volumes dropped by 30% globally.
Historical data shows that major cryptocurrencies like Bitcoin and Ethereum frequently experience lower trading volumes and price declines during this month, reinforcing a generally bearish market sentiment.
Market sentiment
Market sentiment during August tends to be cautious, with many investors taking a break or reallocating their portfolios in anticipation of more favourable conditions in the following months. Expert opinions suggest that the end of the summer vacation period and the lead-up to significant financial quarters might play a role in this trend.
Several external factors contribute to the August downturn. Regulatory developments, geopolitical tensions, and macroeconomic indicators often influence investor confidence during this period. For example, recent regulatory changes in major markets like the U.S. and China have historically impacted cryptocurrency prices and trading volumes.
Bitcoin network difficulty
Further compounding the challenges, Bitcoin’s network difficulty rose by over 10.5% on August 1, 2024, reaching a new all-time high of 90.66 trillion. This increase raises the computational power required to create new blocks on the Bitcoin blockchain, thereby increasing operational costs for miners. From May 9 to July 30, Bitcoin’s network difficulty had decreased, allowing several miners, such as Bitfarms, to report higher earnings in July. However, the sharp rise in difficulty is expected to negatively impact miners’ earnings moving forward, despite enhancing the network’s security.
In a significant development, the U.S. Securities and Exchange Commission (SEC) approved the first-ever spot Ethereum (ETH) exchange-traded funds (ETFs) in July. Despite the launch of nine spot Ethereum ETFs, the anticipated bullish impact did not materialize, and the 2024 Ethereum rally paused in July. This could be due to investors taking profits after the ETFs’ launch announcement. The Grayscale Ethereum Trust (ETH) saw substantial outflows in its initial trading days.
Political influences
Now, let’s discuss another major catalyst for the crypto market in the next four months: the U.S. presidential election, which saw significant developments in July. As we covered in our last crypto blog, click here to read more. Less than a week after an assassination attempt on Republican nominee Donald Trump on July 13, President Joe Biden announced he would not seek reelection. The Biden administration has been somewhat harsh on cryptocurrency, overseeing an ongoing regulatory crackdown on the industry. Crypto investors and experts are hopeful the new presumptive Democratic presidential nominee Kamala Harris will be less antagonistic to the crypto community than Biden has been.
Did you know that Trump says he’ll be the first ‘crypto president’? What will this mean for Bitcoin? Click here to learn more about it.
In late July, Trump emphasised his commitment to crypto-friendly policies if he returns to the White House, delivering the keynote address at the Bitcoin 2024 conference in Nashville. Trump pledged to support U.S. Bitcoin mining, ensure the government would not sell its Bitcoin holdings, and create a pro-crypto presidential advisory council.
Predictions and expert opinions
Industry experts are divided on the future of cryptocurrency markets in August. Some foresee a continued downtrend due to regulatory and economic challenges, while others are hopeful for a recovery driven by advancements. Investors facing the August downturn should consider strategies like hedging, diversifying portfolios, and focusing on long-term holdings. Staying informed about market cycles and external factors can aid in making more strategic decisions.
Wrapping up
Looking past August, the cryptocurrency market will continue to be shaped by various factors. Investors should stay informed to better understand market trends and seize potential opportunities. Generally, August is a downtrend month, characterised by reduced activity, operational challenges, and mixed reactions to key developments.
For professional advice and expert tips on the cryptocurrency market, follow Boz tech. Get the latest trends, strategies, and insights to help you make smart investment choices.
Join our community and boost your crypto knowledge now!
