QCP Capital analysts highlighted ether’s significant underperformance compared to bitcoin in August and warned of further declines in September.
Bitcoin concluded August down 8.6%. The month started with the “Bank of Japan crash,” after which bitcoin struggled to recover above $65,000. Conversely, Ethereum (ETH) performed even worse, dropping 22.2% during August, largely due to heavy selling from Jump Trading, as reported by QCP Capital analysts.
The declines in both bitcoin and ether were observed amid heightened volatility in the cryptocurrency market. The tumultuous price shifts began on August 4, triggered by a sharp sell-off of major tokens in conjunction with equities, following the Bank of Japan’s interest rate hikes and the yen’s appreciation against the dollar. This event marked one of the steepest downturns for risk assets since the “Black Monday” crash of 1987. QCP Capital noted that ether’s decline could be further fueled by Jump Crypto, the cryptocurrency division of Jump Trading, moving substantial amounts of ether to exchanges on the same day.
Moreover, spot ether exchange-traded funds (ETFs) disappointed in August, hinting at a dwindling interest in these products. Ether-based investment products witnessed $5.7 million in net outflows last week, with trading volume falling to just 15% of the levels seen during their initial week in late July.
Historical Trends Indicate Bearish September
The analysts at QCP Capital warned that September could experience a continuation of bearish trends for major cryptocurrencies. They noted, “Historically, September seasonality is bearish, with six of the last seven Septembers recording negative returns and averaging minus 4.5%, which would bring bitcoin to around $55,000 this month.” They predict bitcoin will find support near $54,000, the level it rebounded from in July prior to peaking at $70,000 at the end of the month.
In addition, the front-end options implied volatility suggests participants in the derivatives market anticipate lackluster performance for both bitcoin and ether in the coming weeks, although the long-term outlook remains more optimistic.
According to QCP Capital analysts, they foresee the volatility curve steepening further as short-term volatility decreases in a sideways market, while more long calls are being extended until March for both bitcoin and ether.
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