September Recap
In September, the crypto market experienced a V-shaped recovery. The crypto trend in September was heavily influenced by two main factors: the easing of U.S. monetary policy and the shift in political stands.
At the beginning of September, the crypto market continued its downward trend from August, showing market concerns over whether the Federal Reserve would delay the first rate cut because of slow decline in inflation rate and resilient economic data. The weaker-than-expected employment data released on September 5 reignited the market’s confidence, expecting a rate cut in the upcoming FOMC decision, which subsequently reversed the market’s decline and led to a rebound. After the FOMC meeting on September 18 the Fed accounted an unexpected 50bps rate cut, the crypto market continued to rally. During this period, U.S. Vice President Kamala Harris publicly stated twice within a week that she supports and encourages innovation in digital assets and believes the U.S. should maintain a leadership role in this technology, further boosting market confidence.
After the FOMC meeting, the crypto market showed a strong positive correlation with U.S. stocks market, with the correlation reaching a historical high of 0.72. Both Bitcoin and Ethereum ETFs experienced consecutive days of net inflows. In September, Bitcoin ETFs saw a total net inflow of $1.26 billion, and for the first time since launch, Ethereum ETFs recorded two consecutive weeks of net inflows, indicating that the performance of major cryptocurrencies was increasingly influenced by ETF capital flows. During the market downturn, on-chain data showed a large outflow of Bitcoin from major exchanges, which likely due to the buying activity from long-term holders. For example, U.S. listed company MicroStrategy (MSTR) purchased 18,300 BTC at an average price near $60,000, and Japanese power company Remixpoint also joined the list of listed companies that accumulated Bitcoin into their balance sheets, reinforcing the trend of long-term holders' accumulation.
September was a busy season for blockchain and cryptocurrency activities in Singapore. The annual Token2049 conference and the Solana Break Point event attracted potential investors and participants from around the world. Like Ethereum's ETHCC, Break Point is a conference focused on Solana and its on-chain ecosystem projects, gathering numerous project teams, developers, on-chain users, and investors. I also participated in these events, gaining close insight into the progress of various Solana ecosystem projects. Overall, Solana's high-performance on-chain transactions have laid the foundation for rapid user growth in various ecosystem projects. Compared to Ethereum, Solana’s ecosystem is more mature, covering DeFi lending, derivatives trading, LSDFi, AMMs, prediction markets, DePin devices like mobile and wearable devices, as well as various types of games. The ecosystem projects are vibrant and dynamic.
In altcoins prospective, applications that connect traditional finance with the crypto market or bridging of users between Web2 and Web3 have gained market attention and are more likely to attract institutional investors. Telegram has launched mini-apps initiative that help Web3 users link to real-world applications. For example, the TADA ride-hailing platform, common in Southeast Asia, has integrated into Telegram mini-apps, allowing users to pay for rides with TON tokens or the stablecoin USDT. Paypal now allows its business accounts to buy, sell and hold cryptocurrencies, and the Ethereum Name Service (ENS) project also supports the cryptocurrency transfers through Paypal and Venmo, allowing transactions to be completed using just the ENS domain. Similar technologies and applications that bridge traditional finance with the crypto market, or Web2 with Web3, have shown strong growth potential.
In summary, the crypto market is gradually emerging from the persistent volatility of Q2 and Q3, and the unexpected interest rate cuts in monetary policy have triggered a rebound, coupling with the U.S. political shift towards a more favourable stance on the crypto market, has led to the long-awaited V-shaped recovery. Bitcoin also recorded its highest monthly returns in September’s history. Protocols or applications that filled the gap between Web3 and traditional markets have clearer and comparable investment thesis endorsed by investors, demonstrating massive growth potential.
October Outlook
Historically, October has been Bitcoin’s best-performing month, with a median return of 21%, while Q4 has averaged an impressive 81% return since 2013. On-chain data shows no signs of overextension for Bitcoin, based on metrics such as realized price, net unrealized profit and loss, and miner flows. The stablecoin market capitalization also saw a 1.26% increase in September, adding $2.13 billion, a trend we expect to continue as the rate-cut cycle progresses. A key event in October will be the FTX claims hearing on October 7, where creditors are expected to receive most of their reimbursement in cash. The market anticipates that this influx of cash could potentially be reinvested into crypto assets. Looking ahead, macroeconomic factors such as job and inflation data will continue to play a critical role in determining Bitcoin’s price, especially as we approach the November FOMC meeting and the U.S. elections. Additionally, more pre-election crypto-friendly rhetoric from political figures is expected, which could potentially influence market sentiment.
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