Selling cryptocurrency in August could be a fatal mistake, the most unsuitable month for selling.
The hype around Trump's tariff war is no longer taken seriously. The pause on import tariffs announced by Donald Trump ends on August 7. The deadline is a traditional leverage in negotiations. At the same time, VirtualBacon believes that the upcoming news on tariffs will not have as fatal an effect on the market as many expect.
Attracting around $500 billion through the issuance of treasury bills to replenish the Treasury General Account (TGA) at the Fed will short-term 'pull' liquidity from banks and money funds. The author believes that after reaching the target balance, these funds will return to the economy. The growth of reserves fuels demand for risky assets, so the release of funds after a pause often becomes a catalyst for a bull run in the crypto market.
A weak labor market report heightened expectations for a Fed rate cut. A revision of the data for May-June showed a shortfall in jobs. As a result, the likelihood of easing monetary policy in September rose from 39% to 90+%. A cut in the Fed's key interest rate is positive for the crypto market. Changes increase the investment attractiveness of high-risk assets like crypto.
Forecast of the Fed's decision on the rate
By the fourth quarter, the trader predicts a combination of three 'bullish' drivers.
Rate cut;
Pause in the Fed's balance sheet reduction;
Possible easing of SLR regulations (capital ratio for the largest US banks).
The author also noted seasonality. In his opinion, a weak August shouldn't be perceived as a market slide into crypto winter. Historically, it has been the case that crypto often declines at the end of summer. This happens, among others, due to the vacation season. At the same time, VirtualBacon noted that in previous cycles, August was indeed a period of Bitcoin accumulating strength for the subsequent surge to the highs.
$BTC August for Bitcoin
According to the author's observations, the target for BTC in this cycle could be in the range of $140–150 thousand.
VirtualBacon's forecast concluded that August could be a period of shaking out 'weak hands' from the market. Previously, BeInCrypto reported that retail investors are actively selling BTC, while institutional investors are buying. This power dynamic, in his opinion, serves as a prerequisite for a powerful bull run in the fourth quarter.#
