- September is seen as a key moment for crypto as most assets witnessed a decline.
- Market sentiment is currently in a state of fear, which could impact this month’s trend.
Bitcoin in recent weeks [BTC] has experienced significant price volatility, leading to a decline below the psychological level of $60,000.
While this drop has had an impact on the overall cryptocurrency market, it also presents the opportunity for a crypto bull run, especially as we enter September – a month historically known for negative trends in the financial markets.
However, several indicators suggest that September could break this pattern and usher in a bullish phase for cryptocurrencies.
The currency reserve is decreasing
One of the key indicators supporting the case for a potential crypto bull run is Bitcoin and Ethereum’s dwindling foreign exchange reserves. [ETH].
Historically, when the balances of these assets on the stock exchanges decline, it suggested that investors were moving their holdings into cold storage.
This indicated a long-term holding mentality rather than a desire to sell. This trend often precedes a bull run because it reduces the available supply of these assets on the exchanges, creating the conditions for upward price pressure.
At the time of writing, Bitcoin’s foreign exchange reserves were approximately 2.62 million, continuing a downward trend. The same goes for Ethereum reserves have also fallen to about 18.7 million.
This pattern of declining reserves, which intensified toward the end of the previous year and continues into the current year, could set the stage for a significant increase in prices.
Market sentiment: fear as a precursor to greed
Another factor pointing to a potential crypto bull run is current market sentiment, as measured by the Crypto Fear and Greed Index.
This index measures overall market sentiment, where extreme fear can indicate a buying opportunity and extreme greed can indicate a market top. Historically, a shift from fear to greed often precedes a bull run.
According to data from Mint glassthe market is currently in a state of fear.
This sentiment creates an environment ripe for a bull run, as fear often leads to capitulation, followed by a shift to greed as prices begin to recover.
The cyclical nature of market sentiment suggests that a bullish phase could be imminent after a period of fear.
MVRV ratio: A signal for a bull run
The market value to realized value ratio (MVRV) is another critical indicator that points to a potential bull run. The MVRV ratio measures whether the market value of an asset is above or below its realized value.
When the MVRV is below zero, it generally indicates that the holders are making a loss, indicating that the asset is undervalued and may be due for an adjustment.
Source: Santiment
At the time of writing, Bitcoin’s 180-day MVRV was around -9.6%, indicating that long-term holders were sustaining a loss of more than 9%.
Similarly, Ethereum’s MVRV has been below zero since July, with the current MVRV sitting around -23%, meaning holders are taking a loss of more than 23%.
These negative MVRV levels indicate that both assets are significantly undervalued, and a correction above zero could trigger a bullish run.
Support and resistance levels
From a technical analysis perspective, Bitcoin’s price was below the 50 and 200 day moving averages, indicating that the market is in a bearish or consolidation phase.
However, a move above these moving averages could signal the start of a new bullish phase.
Source: TradingView
The 61.8% Fibonacci retracement level, which currently acts as significant support around $52,016.20, is also crucial.
Bitcoin has tested this level and is trading above it, indicating that holding above it could result in a resumption of a bullish trend.
Moreover, the 38.2% retracement level, which acts as resistance around $58,140.61, is another important level to watch. A break above this level could lead to further gains, which could signal the start of a bull run.
Open interest and volume
Open interest and trading volume are also essential metrics to consider when assessing the potential for a crypto bull run.
At the start of the year, a crypto bull run culminated in March, with Bitcoin hitting its all-time high around $73,000.
During this period, Open Interest and volume increased, peaking at over $75 billion and volume exceeding $199 billion.
Source: Coinglass
Open Interest was also down to around $50 billion, and volume was down to around $100 billion.
However, if these numbers start to rise again, especially in combination with the bullish sentiment, it could signal the start of a new bull run.
A crypto bull run coming in September?
While September has historically been challenging for the crypto market, several indicators suggest this year could be different.
Read Bitcoin’s [BTC] Price forecast 2024–2025
Falling foreign exchange reserves, a market in fear, deeply negative MVRV ratios, and key technical levels all point to the possibility of a near-term crypto bull run.
As Bitcoin and Ethereum continue to shape the broader market trend, the coming weeks could be critical in determining whether the market will shift from fear to greed, potentially leading to significant price gains.
