After Bitcoin’s challenging August, QCP Capital analysts predict a bearish September for the cryptocurrency. However, a potential pivot by the Federal Reserve could provide relief.

According to the digital asset trading desk, Bitcoin’s historical trend suggests it may dip another 5% this month following August’s downswing. Historically, Bitcoin has traded in the red during six of the last seven Septembers, averaging losses of up to 4.5% during those years. QCP Capital noted that this decline could eventually support a potential upward move.

The firm anticipates Bitcoin to gather strength around $54,000, the same level it bounced from before surging to $70,000 in July. At the time of writing, Bitcoin was trading at $58,000, up nearly 2% on a modest broad market climb.

24-hour BTC price chart – Sept. 2

While September typically represents a bearish period for BTC, an expected monetary policy shift from the U.S. Federal Reserve could catalyze a rally, according to Li.Fi CEO Philipp Zentner.

During last month’s Jackson Hole speech, Fed Chair Jerome Powell indicated a shift in interest rates. Investors widely anticipate rate cuts between 25 and 50 basis points later this September.

Zentner highlighted rising BTC dominance, decreasing crypto exchange balances, and an increased supply of BTC from miners entering the market as bullish indicators. BTC dominance rose to 58%, reflecting investor preference for Bitcoin over altcoins like Ethereum, which have underperformed compared to Bitcoin.

Data from CoinGlass showed billions in BTC leaving major crypto exchanges like Binance and Coinbase in the last 30 days. In June, BTC and ETH exchange balances fell to a four-year low. This trend could indicate a bullish investor outlook, although sentiment remains mixed ahead of the expected rate cuts.

Overall, the market is setting up for a potentially significant rally, driven by strong Bitcoin fundamentals, a well-capitalized stablecoin market, and anticipation of a more favorable monetary policy environment. This combination of factors positions Bitcoin and the broader market for a bullish phase as we progress through the year.

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