Bitcoin (BTC) and Ethereum (ETH) Have Started September in the Red, Having Already Suffered Price Declines

Market Still Feeling The Effects Of The Yen Carry Trade

Bitcoin (BTC) and Ethereum (ETH) have had a rough start to September, already experiencing price declines from the月初. This bearish sentiment towards the top cryptocurrencies and, by extension, the broader crypto market is being driven by several macroeconomic factors.

Market Still Feeling Effects Of Yen Carry Trade

Recent developments suggest that Bitcoin and Ethereum are still feeling the heat from the unwinding of the Yen carry trade. The Yen has recently surged against the US dollar, indicating that investors are still selling riskier assets, such as these cryptocurrencies, to close their carry trade positions, which involved borrowing the low-yielding Yen.

In an X (formerly Twitter) post, hedge fund manager James Lavish also suggested that the effects of the Yen carry trade were still at play. He pointed out that the Nikkei 225 had dropped by 3.7% while the USD/Yen trading pair was heading lower.

Additionally, Bank of Japan (BOJ) Governor Kazuo Ueda recently made hawkish remarks, stating that the central bank would continue to raise interest rates if the economy and prices performed as expected. This has also instilled fear among traders, prompting them to close their carry trade positions, which is putting more selling pressure on Bitcoin and Ethereum.

Bitcoin and Ethereum experienced significant losses during the August 5 market crash, which was triggered by the BOJ's decision to raise interest rates for the second time since 2007. Bitcoin fell below $50,000 during the crash, while Ethereum dropped as low as $2,200.

With the effects of the Yen carry trade still lingering and the BOJ hinting at further rate hikes, Bitcoin and Ethereum could face additional price declines in the coming days.

Bitcoin And Ethereum Falling As US Stock Market Crashes

Moreover, Bitcoin and Ethereum's correlation with the US stock market has also played a role in their price declines since the beginning of September. Notably, on September 3, the stock market lost over $1.05 trillion, which also sparked fear in the crypto market and led to a wave of sell-offs for Bitcoin and Ethereum.

This was evident in the outflows experienced by both Spot Bitcoin and Ethereum ETFs on that day. According to data from Farside investors, Spot Bitcoin ETFs and Spot Ethereum ETFs saw total net outflows of $287.8 million and $47.4 million, respectively.

Given the bearish outlook for Bitcoin and Ethereum, a spark is urgently needed to provide bullish momentum for the crypto market. Members of the crypto community are hoping that the US Federal Reserve will cut interest rates at the next FOMC meeting, scheduled for September 17-18, which will provide some relief to the market and help inject more liquidity into Bitcoin and Ethereum.

At the time of writing, Bitcoin and Ethereum are trading around $57,160 and $2,400, respectively, according to data from CoinMarketCap.

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