Shaw, Golden Finance. In the early morning hours of September 26th (Beijing time), the cryptocurrency market suffered another heavy blow. Bitcoin fell below the critical support level of $110,000; Ethereum fell below $3,900, hitting a seven-week low; and Solana dropped 7.2%. Over $140 billion in market capitalization evaporated from the cryptocurrency market. Nearly 250,000 individuals were liquidated, losing over $1.1 billion, and $1.7 billion in long positions were forced to liquidate. This Monday afternoon, the cryptocurrency market experienced a flash crash, with major assets experiencing rapid declines. Within an hour, the total amount liquidated across the network reached $1.026 billion, of which approximately $1.007 billion was liquidated in long positions. The series of severe market setbacks in just one week cast a shadow over the coming month of September. Is the "September curse" of cryptocurrencies repeating itself? What are the market trends for the fourth quarter? Let's take a brief analysis.
1. Could this week's double declines trigger a resurgence of the "September Curse"?
1. What is the "September Curse"?
The "September Curse" refers to the fact that historical price data for the cryptocurrency market, particularly Bitcoin, shows negative average returns and significant declines in September, leading to a seasonal anxiety.
Bitcoin declined against the US dollar in September for six consecutive years between 2017 and 2022. While this trend led many investors to believe that seasonal factors significantly influence crypto market performance, this assumption was disproven in 2023 and 2024. 2. Cryptocurrency Market Performance This Week The cryptocurrency market has been experiencing a slight uptick since the start of September, but volatility has gradually increased since the second half of the month. The cryptocurrency market suffered two major setbacks to begin the week. Monday's flash crash resulted in liquidations worth $1.026 billion, of which approximately $1.007 billion was in long positions. Early this morning, the crypto market suffered another significant blow, with Bitcoin falling below the key support level of $110,000, dropping nearly 4%. Ethereum fell below $3,900, plummeting over 7% intraday to a new seven-week low, continuing the sharp correction seen in cryptocurrencies this week. Solana fell 7.2%, extending its six-day losing streak. Over $140 billion in market capitalization has been wiped out across the cryptocurrency market. Nearly 250,000 people worldwide experienced liquidations, resulting in losses exceeding $1.1 billion, and $1.7 billion in long positions were forcibly liquidated. Historically, September is typically one of the weakest months for risky assets. September's average returns for both US stocks and cryptocurrencies were significantly lower than the annual average. It wouldn't be surprising if the cryptocurrency market maintained its current price level through September and into the fourth quarter. What are the factors driving this week's cryptocurrency market decline? 1. Institutional capital withdrawal may exacerbate selling pressure. The cooling of institutional capital inflows into the crypto market has exacerbated selling pressure. Coinglass data shows that US-listed spot Ethereum ETFs have experienced net outflows for four consecutive days since Monday, with investors withdrawing over $547 million from ETFs. US spot Bitcoin ETFs have seen three net outflows this week, totaling over $479 million. The continued net outflows from spot Bitcoin and Ethereum ETFs indicate weakening institutional demand, potentially leading to a prolonged price correction. Institutional investor demand has been one of the main drivers of the current crypto bull market, and the current slowdown in institutional inflows may have slowed the crypto market's upward momentum. 2. The DAT narrative is cooling, and the "mNAV premium" is disappearing. The digital asset treasury (DAT) craze has subsided, with the flywheel effect and demand for crypto assets declining. Data shows that the market-to-net-asset value (mNAV) ratios of most DATs have essentially reached parity, with ETH DAT experiencing the most significant compression since May. This suggests the "DAT premium" is disappearing. ETH DAT's weighted average mNAV has fallen from a high of over 5x in early summer to below 1x in early September. DAT trading volume peaked in mid-August and declined in September, suggesting that the DAT narrative has faded and valuations have re-anchored to net asset value (NAV). Furthermore, recent regulatory action has added further uncertainty to the future of the DAT model. The U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (Finra) are reportedly investigating unusual trading patterns at over 200 companies that have announced digital asset treasury strategies, with their share prices experiencing significant increases prior to the announcement of their digital asset purchase plans. In conversations and correspondence with the companies involved, regulators have specifically highlighted concerns about potential violations of Regulation Fair Disclosure. This regulation requires listed companies to disclose material information uniformly to all market participants and refrain from selectively disclosing inside information that could be used for trading. Various signs indicate that the DAT narrative is cooling. The belief that simply relying on DAT strategy firms to purchase crypto assets to stimulate market prices is doomed to fail. 3. Future economic conditions are uncertain, raising concerns about the Fed's expected policy. Recently, strong data, including stronger-than-expected US GDP growth and a decline in initial jobless claims, has increased uncertainty about the Fed's future path of interest rate cuts, leading to a decline in market expectations for an October rate cut. Deepening divisions within the Federal Reserve over further rate cuts reflect the policy challenges facing Fed officials in balancing inflation risks with employment concerns. Kansas City Fed President Schmid and Chicago Fed President Goolsbee, two Fed officials with voting rights on the Federal Reserve's monetary policy committee this year, expressed concerns about aggressive rate cuts. In contrast, Vice Chairman for Financial Supervision Bowman and new Fed Governor Milan have pushed for faster rate cuts. The Federal Reserve just cut interest rates for the first time this year last week, but debate remains over the path of subsequent cuts. In his speech on Tuesday, Fed Chairman Powell continued to leave room for further rate cuts, suggesting a cautious approach in a challenging risk environment. Powell stated that interest rates "remain moderately constrained" and face the dual risks of rising inflation and falling employment. He reiterated that it's reasonable to expect tariffs to only push prices up once, emphasizing the need to ensure their impact doesn't persist. Furthermore, Powell gave no indication of whether he would support a rate cut next month. Uncertainty about economic conditions has exacerbated divergent expectations within the Fed regarding future policy, sparking market concerns about the direction of subsequent interest rate decisions and further slowing the upward trend in risky assets like cryptocurrencies. 4. "Black Swan" Events May Trigger Market Panic This week, hacker attacks on two prominent projects triggered a sharp drop in the prices of related tokens. On September 23rd, security firm Cyvers' systems detected suspicious transactions involving $11.3 million in UXLINK, suggesting a theft. SlowMist Yuxian subsequently confirmed the UXLINK hack in a post on the X platform. After stealing the funds, the hackers issued an additional 1 billion UXLINK tokens on the chain. Following the attack, UXLINK's price plummeted. Yesterday, GriffinAI officially announced that the GAIN token on the BNB chain had suffered a major security incident. The attackers successfully minted 5 billion GAIN tokens on the BNB chain and then sold them, triggering a panic sell-off in the market. The price of the GAIN token plummeted by over 90% at one point, severely impacting its subsequent price support. The two hacker attacks targeting the tokens of prominent projects may have triggered a "black swan" effect, exacerbating market panic and, to a certain extent, impacting the overall cryptocurrency market. III. What are the market trends for the fourth quarter? Although the cryptocurrency market experienced a significant setback this week, the market's overall bullish outlook has not significantly changed, and bullish sentiment remains predominantly bullish for the fourth quarter. 1. Coinbase Research predicts that the crypto market will continue to strengthen in the early fourth quarter, driven by resilient liquidity, a favorable macroeconomic environment, and supportive regulatory developments. Bitcoin is expected to perform particularly well. Demand for DAT technology is expected to continue supporting the crypto market, even as the industry enters a competitive "player versus player" phase. Coinbase also emphasized that historical monthly seasonality (particularly the "September curse") is not a significant or reliable predictor of crypto market performance. 2. Grayscale's latest research report indicates that fourth-quarter crypto returns may be driven by a number of distinct themes. First, relevant US Senate committees have begun work on crypto market structure legislation. This represents comprehensive financial services legislation for the cryptocurrency industry and could serve as a catalyst for deeper integration with traditional financial services. Second, the US SEC has approved universal listing standards for commodity-based exchange-traded products (ETPs). This could increase the number of crypto assets available to US investors through ETP structures. Third, all else being equal, crypto assets are expected to benefit from Federal Reserve interest rate cuts (as they reduce the opportunity cost of holding non-interest-bearing currency and support investor risk appetite). 3. Tom Lee, co-founder of Fundstrat and chairman of BitMine, stated that Ethereum is a "truly neutral chain" that will be favored by Wall Street and the White House. Lee further explained that he has observed that the White House and Congress have become more supportive of cryptocurrencies under the Trump administration, with a primary focus on Ethereum. Lee stated that he sees the possibility of Ethereum entering a "super cycle" lasting 10 to 15 years. 4. VanEck published a report stating that over 290 companies currently hold over $163 billion worth of Bitcoin. Given that only 270,000 Bitcoins have been mined during the same period, corporate demand is currently growing at approximately 4.3 times the rate of Bitcoin production. If Bitcoin held by ETPs, other funds, and governments is taken into account, total institutional demand is growing at approximately 6.7 times the rate of production. The accelerated purchases of Bitcoin by institutional investors indicate a growing appreciation for its deflationary supply, which gives it unique store-of-value properties. 5. Bitwise Asset Management stated that previously, digital asset treasury strategies were primarily centered around Bitcoin, but now companies are allocating large amounts of ETH. Analyst Max Shannon noted that ETH treasury is no longer a fringe topic but is becoming a structural pillar of the cryptocurrency capital market. ETH is not simply a hedging or speculative tool, but a programmable financial asset that connects corporate financing with the on-chain economy. 6. Billionaire Mark Cuban stated that companies holding Bitcoin as treasury assets offer an alternative hedge against fiat currency risks. 7. Cryptoquant analyst Axel Adler Jr. released a market analysis stating that the market has entered a corrective range-bound pattern, and the current rebound is more of a temporary recovery than a trend resurgence. Within the channel, key support lies at $109,500. If this level holds and the structure is pushed back above zero, the bullish pattern will be restored and there is hope for a retest of $117,700.
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