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After a rough September, Bitcoin bets on strong October

2021.10.14 Hunain Naseer

A look at the crypto market’s developments and performance in September 2021 — Market Watch Monthly

Key takeaways

  • After a solid August, alts saw losses in September as BTC struggled stay above 40,000 USDT.
  • BTC and stocks underperformed as the U.S. dollar strengthened in September.
  • OKEx trading data showed an increase in spot buying, consistent with retail accumulation during bearish phases.

Bitcoin recap

September ended with Bitcoin down nearly 9%, breaking the market leader’s two-month green streak. During the month, BTC price fluctuated 25% between the monthly high of around 53,000 USDT and the monthly low just under 40,000 USDT, as per the OKEx BTC/USDT price.

Bitcoin’s performance in the month, however, did not come as a surprise, as September is historically the worst-performing month for the leading cryptocurrency. Altcoins, meanwhile, were not all down in the month, with notable performances from AVAX, ATOM, SOL and LUNA at 53.05%, 42.88%, 18.71% and 12.85%, respectively.

OKEx’s BTC/USDT daily chart ending Sept. 30, 2021. Source: TradingView

September did end with BTC successfully having defended the 40,000 USDT support, which proved to be bullish heading into October — historically Bitcoin’s best-performing month.

BTC and stocks suffered from tapering woes

September saw both BTC and stocks suffering losses as markets started factoring in the possibility of the U.S. Federal Reserve tapering asset purchases. These asset purchases have largely kept equities afloat since the pandemic started.

Moreover, speculation around interest rates rising in the near future also strengthened the U.S. dollar and added further pressure on equities and Bitcoin.

This meant only oil and the U.S. dollar ended September in the green with respective gains of 9.5% and 1.73%. Meanwhile, BTC, NASDAQ, S&P 500 and gold were in the red for 8.97%, 5.31%, 4.76% and 3.14%, respectively.

Bitcoin’s September performance compared with major assets. Source: TradingView

The risk of hawkish monetary policy changes in the future cannot be ruled out as a major hurdle in Bitcoin’s further advance, as the leading cryptocurrency has shown a strong correlation with equities. In the future, we may want to see this correlation weakening in order for BTC to maintain a bull run that extends well into 2022.

September’s trading sentiment on OKEx shows spot buying

Despite the red September, OKEx trading data showed a continued uptick in month-over-month trading volumes for all markets — spot, swaps and futures. However, the biggest increase in September was seen across spot volumes, which makes sense due to the fact that market participants attempt to accumulate coins on the spot market during market corrections.

OKEx trading volumes breakdown for September 2021. Source: OKEx

As for the total breakdown, spot trading accounted for 25% of all volume in September, followed by futures accounting for 27% and perpetual swaps accounting for 48%.

Alts mostly down with few exceptions

After a strong showing in August, altcoins faced losses in September as BTC struggled for support. ETH, for instance, was down nearly 12% — while XRP, ADA and DOGE all saw losses of 20% or more.

The notable exceptions in the top alts were SOL and LUNA, managing to gain 18.71% and 12.85%, respectively.

Most major altcoins saw losses in September. Source: OKEx

Despite most alts ending the month in the red, we saw the Altcoin Season Index continue to rise in September, mostly because Bitcoin’s dominance was falling in this period. The value peaked at around 69 — just under the altcoin season threshold — before ending the month in neutral territory.

Alts remained under pressure in September. Source: Blockchain Center

DeFi TVL and volumes remain stable

Decentralized exchanges and decentralized finance protocols continued to remain popular, but their growth took a hit in September. While the TVL figures dropped in the month, volumes remained almost unchanged.

DeFi value locked figures for the last three months. Source: DeBank

September started with the gross value locked in DeFi at around $117.2 billion and ended with the figure at around $106.8 billion. Similarly, the net value locked started with roughly $87.5 billion and ended just under $80 billion.

As per data from Dune Analytics, decentralized exchanges managed to retain the growth they saw in August. Volumes in September roughly had the same composition as August, which is a positive sign for the future of DeFi.

DEXs saw stable volumes in September. Source: Dune Analytics

In terms of price performance, however, DeFi assets remained muted, with only FTM showing a strong performance. All other tokens, including SNX, AAVE and COMP, were in the red, with the biggest losses faced by MKR.

Most of the top DeFi tokens saw losses in September. Source: OKEx

Looking ahead

With September out of the way and Bitcoin managing to hold the support around 40,000 USDT, we expected bullish performance from BTC, and that’s what we’ve seen so far. Moving forward, however, the correlation between Bitcoin and traditional financial markets needs to be observed, as monetary policy changes pose significant risk to these assets.

However, the market is currently expecting positive developments in regard to pending ETF applications, and any approval in October could help BTC tackle its ATH and potentially set a new one.

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Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.



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