Crypto market is entering its 2 worst months of the year

Investing.com -- Bitcoin is heading into its two historically weakest months, with analysts noting that the world’s largest crypto asset has declined in nine of the past 13 Augusts and eight of the past 13 Septembers.

The cryptocurrency is currently struggling to reclaim the $115,000 level after briefly dipping to $112,000 on Saturday. Analysts see a technical air pocket between $110,000 and $115,000 following last month’s rapid jump from $110,000 to $123,000.

According to Compass Point Research, Bitcoin’s pullback on Friday was accelerated by a wave of long liquidations, totaling $922 billion across international perpetuals exchanges.

Altcoins bore the brunt of this, with $690 million in liquidations, pointing to persistent excess leverage in the crypto markets.

“Despite the sell-off, leverage within crypto markets remains elevated, with DeFi lending and open interest just off all-time highs,” Compass Point analysts said in a note.

In the event of further selling, the brokerage sees $106,000 as a key support level, identifying it as the short-term holder cost basis.

At the same time, trading volumes for crypto treasury stocks continue to decline, with activity falling since the July 21 peak. The report warns that “lower volumes and tighter net asset value (NAV) premiums limits TreasuryCo’s ability to use ATMs.”

In the report, Compass Point also flagged MicroStrategy’s (NASDAQ:MSTR) shift away from at-the-market (ATM) financing, a move that may impact BTC demand.

“We believe investors have overlooked MSTR’s pivot away from ATM financing which reduces a meaningful driver of BTC buying pressure,” the firm wrote.

While spot trading volumes remain elevated relative to second-quarter averages, the report says they are beginning to normalize lower.

Meanwhile, open interest in crypto derivatives remains just off record highs, contributing to price swings. Funding rates for BTC and ETH eased last week but remain above historical averages.

The stablecoin market was steady week-over-week, though a standout was Ethena’s USDe, which jumped 24% to $9.3 billion. Compass Point notes this could be “cannibalizing some of USDC’s DeFi usage given USDe’s higher yields.”

Outflows from crypto investment products reached $223 million last week, ending a 16-week streak of inflows.

Bitcoin ETFs in the meantime saw $643 million in net outflows, while ETH ETFs posted $154 million in inflows. Despite the cooling sentiment, long-term BTC supply remains tight, and Treasury buyers spent $1.45 billion on BTC last week, even as MicroStrategy paused new purchases ahead of its results.

The company now forecasts a 30% BTC yield for 2025 after achieving 25% year-to-date.

In other crypto developments, the crypto world has been focused on the SEC’s latest efforts to support crypto adoption following the White House’s digital asset recommendations, including the launch of “Project Crypto.”

Recent initiatives include supporting tokenization through regulatory exemptions and permitting in-kind creations for crypto ETFs—steps expected to boost liquidity and reduce tracking error as more ETFs enter the market in the second half of 2025.