Bitcoin (BTC) and Ethereum (ETH) have seen a downtrend since the beginning of September, with various macroeconomic factors contributing to this negative sentiment. The recent surge of the Yen against the US dollar has led investors to unwind their carry trade positions, putting selling pressure on cryptocurrencies like Bitcoin and Ethereum. Hedge fund manager James Lavish highlighted the effects of the Yen carry trade, further exacerbating the downward pressure on these digital assets.
The Bank of Japan’s (BOJ) Kazuo Ueda’s hawkish statement regarding future rate hikes has also added to the bearish outlook for Bitcoin and Ethereum. The announcement of potential interest rate increases has fueled fears among traders, leading to more sell-offs and depreciating prices for these cryptocurrencies. The aftermath of the BOJ’s decision to hike rates earlier in August had already caused significant losses for Bitcoin and Ethereum, setting the stage for further declines in September.
Another factor impacting the prices of Bitcoin and Ethereum is their correlation with the US stock market. The recent market crash on September 3, which resulted in a loss of over $1.05 million from the stock market, instilled fear in crypto investors as well. This fear triggered a wave of sell-offs for Bitcoin and Ethereum, as evidenced by the significant outflows from Spot Bitcoin and Ethereum ETFs on that day. The bearish sentiment in the stock market has spilled over into the crypto market, further pressuring the prices of these digital assets.
Given the current bearish outlook for Bitcoin and Ethereum, there is a pressing need for a catalyst that could reverse the downward trend and provide a bullish momentum for the crypto market. The lingering effects of the Yen carry trade, coupled with the BOJ’s hawkish stance on rate hikes and the correlation with the US stock market, have created a challenging environment for these cryptocurrencies. Traders and investors are eagerly awaiting a positive development that could potentially shift the tide and bring about a more optimistic scenario for Bitcoin and Ethereum.
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