Bitcoin, the world’s leading cryptocurrency, appears to be on shaky ground as it heads into September, historically a challenging month for the digital asset.

The uncertainty stems from a combination of factors, including the latest decision by the US Securities and Exchange Commission and broader macroeconomic concerns.

August concluded with Bitcoin experiencing a setback as it relinquished its gains following the SEC’s decision to delay its ruling on a Bitcoin spot Exchange-Traded Fund (ETF).

This regulatory delay has raised questions about the timing of potential mainstream adoption of Bitcoin investment vehicles.

According to Noelle Acheson, the author of “Crypto is Macro Now,” investors should closely monitor the growing US budget deficit.

In a Blockworks report, Acheson warns that an expanding deficit may lead to increased debt issuances, but the confluence of lower global demand for American government debt and the central bank’s efforts to reduce its balance sheet holdings could result in a shortage of buyers.

Acheson noted that the “Fed could be encouraged to change its strategy in case of an urgent need,” potentially reigniting the money-printing days of 2020-21.

“This should lead to a scenario where yet again BTC outperforms stocks given its sensitivity to liquidity, its inverse relationship to the dollar and its detachment from the economic doldrums affecting the world’s large economies,” he added.

Bitcoin has a historical pattern of struggling in the month of September, with six consecutive years of poor performance. Even during the final leg of the previous bull market in 2021, the alpha coin lost 7% in September before rebounding with a 40% gain the following month, as pointed out by Acheson.

Tom Essaye, the founder of Sevens Report Research, also highlighted the Federal Reserve’s heightened focus on “super-core” inflation rates, which have surged to 3.9% from 3.2% in June. He predicts a more hawkish stance from the Fed, a factor not yet fully priced into the financial markets and the cryptocurrency sector.

Amid these challenges, Bitcoin bull Anthony Pompliano offers a more optimistic outlook. He believes that two potential shocks in the coming months could reignite a bull market reminiscent of 2020.

In a recent TV interview, Pompliano anticipates that regulators will eventually approve a spot-based Bitcoin ETF, providing a significant boost to BTC accessibility and adoption.

Moreover, he suggests that the approval of a Bitcoin ETF coinciding with the next BTC halving, estimated to occur in April 2024, could propel Bitcoin into a full-blown bull market.

As Bitcoin navigates these turbulent waters, the cryptocurrency community remains attentive to regulatory developments, macroeconomic shifts, and the potential for market-altering catalysts on the horizon.

Featured image from Corporate Finance Institute

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