Analysts at QCP Capital highlighted that Ethereum significantly underperformed Bitcoin in August and warned that further declines could come in September.
“Bitcoin ended August down 8.6%. We started the month with the ‘Bank of Japan crash’ and Bitcoin never recovered above $65,000. Ethereum Ethereum
+1.03%
“August performance was quite weak, down 22.2%, due to the alleged selling by Jump Trading,” QCP Capital analysts said.
The price declines for both Bitcoin and Ether in August came amid a period of significant volatility in the cryptocurrency markets. The bulk of the price action last month began on August 4, when major tokens plunged along with stocks due to the Bank of Japan’s rate hike and the subsequent appreciation of the yen against the dollar. This selloff was one of the worst declines in risk assets since the “Black Monday” crash of 1987. According to QCP Capital, Ether has underperformed Bitcoin since this leverage unwind event, and the decline could be further exacerbated by Jump Trading’s cryptocurrency arm, Jump Crypto, moving a large amount of Ether to exchanges on the same day.
Also, the spot Ether exchange-traded fund (ETF) fell below expectations in August, suggesting that interest in the product is waning. Ether-Based on The investment product saw net outflows of $5.7 million last week, with volume down 15% from its debut week in late July.
Historically, September is a seasonally down month.
Analysts at QCP Capital added that major cryptocurrencies could see further downside in September.
“Historically, September seasonality has been weak, with six of the past seven Septembers being negative and an average return of -4.5%. If the same were to happen this month, it would take us to around $55,000,” the analysts said. They expect Bitcoin to find support around $54,000 over the next month, before briefly reaching $70,000 later that month following its July bounce.
Additionally, the implied volatility of front-end options suggests that derivatives market participants are betting on underperformance of both Bitcoin and Ether in the coming weeks, with a longer-term turn toward bullishness.
“We expect the vol curve to steepen further as front-end vol becomes lower in a sideways market. At the same time, both Bitcoin and Ether are seeing more long calls being issued through March,” the QCP Capital analyst said.
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