Decentral Block Post

Bitcoin (BTC) bulls should not get excited about the recovery from the June lows of $17,500 just yet as BTC heads into its riskiest month in the coming days.

The psychology behind the "September effect"

Historic data shows September being Bitcoin's most worst month between 2013 and 2021, except in 2015 and 2016. At the same time, the average Bitcoin price decline in the month is a modest -6%.

Interestingly, Bitcoin's poor track record across the previous September months coincides with similar downturns in the stock market. For instance, the average decline of the U.S. benchmark S&P 500 in September is 0.7% in the last 25 years.

Traditional chart analysts have dubbed this annual drop-off as the "September effect."

Analysts argue that investors exit their market positions after returning from their summer vacations in September to lock gains, or even tax losses, ahead of the year's close.

Bitcoin (BTC) futures are starting to see record discounts as sentiment among derivatives traders worsens. 

In its latest dedicated report issued Aug. 23, analysis firm Arcane Research painted a worrying picture of morale among BTC futures participants.

Futures basis revisits June lows

After an initial shock during June’s BTC price drop, which has since held as a macro bottom, Bitcoin derivatives have not been the same.

After an initial bounce, metrics are trending downwards, and this month are challenging records.

Futures basis — the difference between futures contract prices and the Bitcoin spot price — is already back at lows only seen during June’s dip to $17,600. The move came thanks to last week’s sudden sell-off on BTC/USD, which resulted in multiple visits below the $21,000 mark.

Bitcoin (BTC) fell to daily lows on Aug. 26 as market nerves heightened into new macro triggers.

Pre-Fed blues hit BTC markets

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD dipping to $21,332 on Bitstamp ahead of fresh commentary from Jerome Powell, Chair of the United States Federal Reserve.

Part of the Fed’s Jackson Hole annual symposium, Powell was set to deliver a speech on the day that spectators hoped would provide new cues on economic policy going forward.

With U.S. Consumer Price Index (CPI) inflation slowing since June, interest remained high over the extent of key interest rate hikes in September.

Summarizing the current economic situation in the U.S., macro analyst David Hunter argued that the Fed would have no choice but to change course before the end of the year.

The founder of decentralized finance (DeFi) protocol Synthetix, Kain Warwick, has submitted a proposal that would turn off very high yield returns for SNX stakers and cap the total SNX token supply at 300 million. 

The Synthetix protocol allows traders to issue synthetic versions of crypto native assets, traditional financial assets, and commodities on the Ethereum and Optimism networks.

In an Aug. 25 Synthetix Improvement Proposal (SIP) Warwick explained that SNX reward inflation was initially intended to “bootstrap the network”, however, he believes it’s no longer necessary as they can generate sustainable fee yields from atomic swaps.

A big rise in fee revenue has been a result of DeFi protocols 1inch and Curve starting to use the Synthetix platform to conduct atomic swaps, bringing in more traffic to the protocol. In June the protocol surpassed $1 million in daily fees - which was four times the amount Bitcoin was making. 

According to cryptofees, Synthetix is currently taking a seven-day average of $158,857 in fees, which is a little bit below Bitcoin’s seven-day average of $222,651.