Bitcoin (BTC) Monthly Review: August 2021

The month of August ended with significant losses for cryptocurrencies, highlighting an 8.6% drop in the price of Bitcoin (BTC).

August ended with substantial losses for cryptocurrencies, with Bitcoin (BTC) dropping 8.6% in price.

The month began with the “BOJ collapse” event, which had a negative impact on the market.

Despite several attempts at recovery, BTC failed to break above the $65k level, leaving the asset in a weak position to close the month.

The drop comes as Ethereum (ETH) suffered an even steeper decline, dropping 22.2% in August.

The drop is attributed to the alleged sell-off by Jump Trading, which added to the bearish pressure in the market.

Looking ahead to September, the expectations are not optimistic.

Historically, September has shown a bearish performance pattern, with six of the last seven years posting negative returns and an average return of -4.5%.

If this historical trend continues, BTC could experience a further drop, settling around $55k.

However, BTC is expected to find a strong support level around $54k, a critical level which already showed its importance in July by serving as a bounce before BTC hit $70k.

In terms of economic data to be released this week, the highlights include the Jobless Claims scheduled for Thursday, September 5 and the Nonfarm Payrolls (NFP) Report scheduled for Friday, September 6.

The reports, however, are not expected to trigger substantial movements in cryptocurrency prices, considering that macroeconomic data has had a decreasing impact on the crypto market in recent weeks.

Market Outlook and Investment Opportunities in Bitcoin

Despite the recent calm in the market, there are signs of a strong bullish bias in the medium term.

The volatility curve is expected to steepen further, with short-term volatilities declining in a sideways market.

Additionally, there is an increase in the buying of long-term call options for BTC and ETH, which adds to the perception of a possible recovery in the medium term.

For instance, the recent buying of BTC-28MAR25-120k-C options, which has pushed its open interest to 2.1k, suggests that investors still hold an optimistic view on the future of BTC.

For those looking to generate returns in this declining interest rate environment, an interesting opportunity presents itself with Conditional Fixed Coupon Convertibles (CFCC).

These instruments allow for an annual return of up to 23%, as long as the spot price remains above $53k.

The BTC CFCC option expiring on November 8 offers additional protection with a strike price of $50k and a protection level of $40k.

Only if the spot price drops below $40k, the deployed USD will be converted into BTC at $50k.

This strategy provides solid returns in a lower price environment, capitalizing on the possibility of interest rate cuts and stable returns in a volatile cryptocurrency market.