Crypto market posted over 13% decline in August, bearish trend may continue in September

• Cryptoassets experienced a 13.1% decline in their total market capitalization in August, driven by fears of recession.
• Bitcoin declined 11.1% in August, while Bitcoin ETFs witnessed $142 million in net outflows. 
• Crypto market is currently experiencing uncertainty, which may continue until October, notes Bitwise.

Cryptocurrencies witnessed steady declines in August with the general market capitalization dropping over 13% due to weak unemployment data and increased fears of recession, according to Binance’s monthly report. Likewise, Bitwise Chief Investment Officer Matt Hougan noted that the increased market uncertainty may continue until October.

Bitcoin and crypto market could be set for another rough September

Several cryptocurrencies recorded weak performances in August as Q3 '24 nears a close. The performance was characterized by a 13.1% decline in the general crypto market capitalization, per Binance Research.

Some notable causes of the market decline include weaker-than-expected US macroeconomic data and the unwinding of the Japanese Yen "carry trade" on August 5.

Bitcoin's monthly decline was 11%, while BTC ETFs posted $142 million in net outflows. Altcoins such as Ethereum and Solana both fell over 24% in August. Ethereum witnessed decreased on-chain activity in the month with increased outflows in its Total Value Locked (TVL).

Solana also witnessed a drastic decrease in meme coin trading, resulting in a 27.7% decline in decentralized exchange trading volume on its blockchain. Binance suggested that the trading volume decrease may have resulted from rug pulls that occurred with several projects on its network, causing increased fears among investors.

What to expect from crypto in September

As the market tries to recover from an eventful August, cryptocurrencies may repeat a similar performance in September.

According to Bitwise Chief Investment Officer Matt Hougan, September is one of only two months in which Bitcoin experiences a negative average return.

Hougan stated that Bitcoin has fallen 4.5% on average in September since it began trading in 2010. This is largely due to the increased negative sentiment surrounding the general investment market.

"Bitcoin is not the only asset that suffers from the back-to-school blues. Since 1929, September is the only month when stocks fall more often than they rise," Hougan noted.

Bitcoin has declined over 2% in the month as uncertainties storm the general market. The asset dipped below $54K on Friday — its lowest price since August 5 — before recovering on Monday.

However, Matt Hougan notes a few factors that could lead to a reversal of fortune for the asset. These include the upcoming presidential elections, alongside the possibility of the Federal Reserve (Fed) cutting interest rates by 50 basis points later in the month.

The crypto market may continue to experience rocky price movements in September before seeing a recovery in October, which has historically been a positive month for Bitcoin.

Bitwise Head of Alpha Strategies Jeff Park highlighted that Bitcoin has produced a "staggering" return of 13,656,203% vs. +619.5% when held from October to April vs. May to September.