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- Bitcoin and tech stocks have shown resilience this month, despite the historic August seasonal weakness.
- Analysts are optimistic about a future BTC rally amid improving market sentiments.
Bitcoin (BTC) has dropped further below its all-time high (ATH) since the beginning of August. Historically, August has been a challenging month for stocks and cryptocurrencies. However, Bitcoin and other cryptocurrencies could defy the trend this month due to economic factors.
Historical Performance of Tech Stocks in August
The current U.S. stock market looks fragile after a strong July. Discussions about inflationary and dimming hopes for the Federal Reserve interest rate cuts have now taken center stage.
The market setup is not surprising. This is because August has been the second-worst month of the year for the tech-heavy Nasdaq Composite. On average, the stock recorded a monthly gain of just 0.3%, compared with the 0.9% advance for July in the same period.
However, the S&P 500 SPX and the Dow Jones Industrial Average DJIA demonstrate better performance in August. The S&P 500 has registered an average return of 0.7% in August since 1928. Likewise, the blue-chip Dow has averaged a 1% increase in August since 1897.
Nonetheless, market experts anticipate some pullback in non-quality stocks this month. They cited concerns about rising inflation and the Fed’s decision to leave interest rates unchanged.
According to the CME FedWatch Tool, the odds of a September rate cut dropped from around 63% earlier this week to 39%. Now the question is whether tech stocks can sustain the recent rally without the support from lower interest rates.
Clark Bellin, President and Chief Investment Officer at Bellwether Wealth, commented that the future stock market rally is not dependent on a potential rate cut. According to him, tech stocks have already posted strong gains so far this year without any rate cuts.
His comments do not mean that rate cuts are not important to the economy. However, it suggests the market is adjusting to the idea that rates may stay higher for longer.
Implications for Bitcoin Price
Still, the Fed’s decision to keep interest rates unchanged has implications for cryptocurrencies like Bitcoin. Tight monetary policy also tightens liquidity and strengthens the US dollar. As a result, investors are less likely to pour money into volatile markets like crypto.
The potential drop in tech stocks this August may also affect the BTC price. Typically, crypto prices often face downward pressure when tech stocks decline, due to their correlation with risk-on assets.
As highlighted in our previous article, Bitcoin posted losses from 2013 to 2024, during August and September in 8 out of 12 years. This decline emphasizes the seasonal weakness experienced by the leading asset.
At the moment, Bitcoin is experiencing a downtrend. Within the past 24 hours, the BTC price has decreased by 0.52% to $114,274, per Marketcap data. Despite the price decline, the daily trading volume has surged 13.9% to $55.2 billion.
Investors remain optimistic about BTC’s future movement. In a recent study we reported on, analysts forecasted that BTC could hit $150,000 soon. Their prediction is based on increased BTC demand from exchange-traded fund (ETF) buyers.
In a more bullish forecast, BitMEX CEO Arthur Hayes claimed the Bitcoin price could climb to $250,000 before the end of 2025.
