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Kraken predicts continued losses in September for Bitcoin

Photo of: Nathan VDH
by Nathan VDH

Kraken, the cryptocurrency exchange platform (more info here), predicts Bitcoin will collapse in September and then return to its aggressively volatile status.

The U.S. crypto exchange speculated on a decline in the price of Bitcoin this month, based on its August 2020 volatility report. According to the exchange, Bitcoin will collapse in September and post negative returns.

The Kraken report points out that the month of September has historically been the worst month throughout Bitcoin’s history, with an average -7% return for owners. It also adds that although Bitcoin’s yields were below average for most months of the year, it is likely that yields will be worse this month.

Beyond this bearish horizon, the report sees some hope in Bitcoin’s performance. For example, BTC’s record level has not changed for more than a year. The crypto exchange claims that such a dynamic trend indicates a bull market.

Kraken imagines aggressive fluctuations of Bitcoin in the future. “Twelve times in the past, Bitcoin’s annualized volatility has bottomed out at between 15 and 30% before climbing, on average, to 140% and returning to +196% over 94 days. At the end of August, 38 days had passed since the low of 23% volatility set on July 24, with volatility increasing to 44% and the price up 25%.

This indicates that there is still room for gains in the coming months based on similar historical events. According to the report, September often had the lowest average volatility, suggesting that the coin would not likely experience accelerated volatility until the fourth quarter of the year.

Nevertheless, it is important to keep in mind that this is not necessarily a prediction for the future. Bitcoin’s recent movements give the impression that the king of crypto is moving away from the market’s catalytic model.

This is the case, for example, when the coin recorded a strong correlation with the S&P stock index for most of last month. After reaching a local high of 0.84, the correlation collapsed to -0.02.

Another good news according to this report is that as of August 31, a record 63% of Unspent Transaction Outputs (UTXOs) on the Bitcoin blockchain have not moved in +1 year, indicating that an unprecedented number of Bitcoins are in the hands of long-term holders. Historically, this dynamic has foreshadowed a new bull market.

One of the most important question for Bitcoin in the end of 2020 will be whether it can reclaim dominance in the overall market against the fast growing DeFi market. If decentralized finance can show that their platform and model are simply better than Bitcoin, it could be the beginning of a downturn for the first and largest cryptocurrency.