Bitcoin btc2.37%Bitcoin was trading at $57,000, significantly higher than last Friday’s low of $52,000. Its price action has correlated well with American stocks, as the Nasdaq 100 and Dow Jones rose on Monday and wavered on Tuesday, Sept. 10.
Bitwise explains why Bitcoin will rally
In a note, the Chief Investment Officer at Bitwise, a leading crypto investment company with over $4 billion in assets, said that Bitcoin may see a “significant rally” in the next few months.
He cited three key reasons for this. First, he explained that Bitcoin and other risky assets, like technology stocks, tend to perform poorly in September, followed by a rebound.
According to his study, which analyzed data from 2010 to 2024, September was the worst month for Bitcoin, with an average return of minus 4.5%. He also noted that it was the worst month for the tech-heavy Nasdaq 100 index, which typically sees a 6% drop.
For this year, Matt Hougan identified three catalysts that could push Bitcoin higher in the coming months. First, the Federal Reserve is expected to start cutting interest rates in September and deliver two more cuts by the end of the year. He predicts the bank will implement 125 bps worth of cuts by December, which could push risky assets higher.
Second, Hougan expects Bitcoin to rebound as the market gains more clarity on the outcome of the general election. Polymarket suggests that Donald Trump has a higher chance of defeating Kamala Harris, although other mainstream polls show the two candidates are quite close and within the margin of error.
Third, he highlighted ETF inflows as being strong despite previous outflows. Most notably, he believes that investment advisors are adopting Bitcoin funds faster than “any new ETF in history.” In fact, some of the biggest hedge funds, such as Citadel, Millennium, and Bridgewater Associates, have invested in Bitcoin.
Bitcoin price faces risks
Still, the bullish case for Bitcoin comes with some risks. The most notable one is that Bitcoin is about to form a death cross, as the gap between the 200-day and 50-day Exponential Moving Averages continues to narrow.
It has moved from 4% last week to less than 1%. In most periods, Bitcoin tends to drop sharply after this crossover happens.
Another risk is that Bitcoin currently lacks a clear catalyst or narrative going forward. The last bull run was primarily driven by anticipation of halving and ETF approvals.
EigenLayer (EIGEN) rose to an intraday high of $2.73, up by over 25% from its lowest level on Sep. 7. However, it remains 30% below its all-time high.
OKX’s pre-market futures allow people to trade tokens before they are airdropped. These futures often have thin volumes, making them highly volatile, and their price action does not typically predict what will happen when the airdrop occurs.
The rebound came after the EigenLayer Foundation announced details of the second season of its stakedrop, set to begin on Sep. 17. The first season of the airdrop ended on Sep. 7.
This season will see 70 million EIGEN tokens allocated to stakers and operators with up to 10 million tokens going to ecosystem partners. Six million tokens will be allocated to the community, including open-source contributors and early supporters, while the remaining tokens will go to Protocol Guild.
EigenLayer has become one of the biggest players in the crypto industry, where it offers staking solutions. Data by DeFi Llama shows that it has become the second-biggest player in the DeFi industry with over $10.9 billion in total value locked.
Restaking is a technology that allows Ethereum eth2.93%Ethereum stakers to reuse their tokens across other protocols. In addition to EigenLayer, other popular liquid staking solutions in the crypto industry include Symbiotic, Puffer Finance, and Renzo.
EigenLayer’s price during its airdrop is still unknown, but analysts expect it to be one of the biggest listings of the year. A Polymarket poll with $1.9 million in assets estimates that EigenLayer will have a fully diluted market cap of less than $10 billion.