Bitcoin gained in September while many traditional assets “suffered meaningful losses, underscoring crypto’s diversification properties,” according to an update shared by Grayscale.
The pressure on global markets “seemed to stem from rising government bond yields and higher oil prices,” the report from Grayscale noted.
As explained in the report, strong fundamentals played “a key role as Bitcoin’s on-chain metrics improved during the month. Stablecoin market capitalization steadied after declining over the last year and digital asset markets remained focused on developments around Layer 2 blockchains and the potential for spot Bitcoin ETF approval in the US market.”
Despite encouraging signs “for the crypto industry itself, the broader financial market backdrop may remain challenging for the time being.”
However, Bitcoin’s recent stability “suggests that its valuation could begin to recover once the macro backdrop improves.”
The report also mentioned that Bitcoin (BTC) has “gained 4% in September, and the increase was a notable contrast to the meaningful losses for many traditional assets during the month.”
Cryptocurrencies are now more “correlated with other markets, but they have continued to provide investors with a degree of diversification through this challenging market environment.”
The report added that the latest pressure “on global assets seemed to emanate from the US bond market.” Part of this can be explained by the Federal Reserve.
At its mid-September meeting, the central bank signaled “that it will likely raise overnight interest rates one more time later this year, and that it may lower rates next year more slowly than previously expected.” The Fed’s refreshed guidance “helped to push up short-maturity bond yields and lifted the value of the Dollar.”
Bitcoin’s resilience alongside significant losses “for traditional assets speaks to the diversification benefits of digital assets as well as the industry’s steadily improving fundamentals, in our view.”
The next major catalyst for Bitcoin’s price could “come from approval of a spot ETF.”
The SEC has until October 13th to “seek a rehearing following its loss to Grayscale in the recent ruling from the DC Circuit Court of Appeals.” If the agency forgoes an appeal, it “will then reconsider Grayscale’s pending application, as well as the applications of other spot bitcoin ETF filing it’s currently considering.”
The Grayscale report concluded:
“Despite these encouraging signs, the broader financial market backdrop may remain challenging for the time being: the Federal Reserve is still tightening, government bond yields may still be finding a new equilibrium, and a “soft landing” for the US economy is not assured. However, Bitcoin’s recent stability suggests that its valuation could begin to recover once the macro backdrop improves.”