Has the Virtual Asset Rally Already Ended?…Bitcoin Pressured by 'Strong Dollar and October Interest Rate Hike'

▲ Gold, Bitcoin (BTC)/ChatGPT generated image ©

As the upward momentum in the virtual asset market weakens, major assets including Bitcoin (BTC) are once again under pressure. With the strong dollar and the rapidly increasing possibility of a US interest rate hike in October, analysis suggests that the rally which began last Monday has formed a temporary peak.

According to investment media outlet FXStreet on September 28 (local time), the virtual asset market showed a downward trend from the beginning of the week. Although the decline was not as sharp as the precious metals market's plunge, the strong dollar pressured risk assets overall, preventing the rally from last Monday from continuing. Chris Beauchamp of IG assessed that the rally at the time remains a short-term peak to date.

In particular, the prospect of a US benchmark interest rate hike in October is weighing on the virtual asset market. Beauchamp diagnosed that the market's perception of a potential October interest rate hike has strengthened from 'likely' to 'very likely,' and could soon rise to a virtually certain level. The risk asset market showed mixed trends in September, and virtual assets were no exception to this atmosphere.

This week's US employment figures were cited as a key variable that will dictate interest rate hike prospects. With a strong employment report released last month significantly easing concerns about the US labor market, rising oil prices and global inflationary pressures are also persisting. Beauchamp predicted that unless this employment data turns out to be unexpectedly very weak, the likelihood of an October interest rate hike will be difficult to diminish.

Bitcoin is also failing to find upward momentum amidst the strong dollar and concerns about interest rate hikes. With gold and silver also showing weakness simultaneously, and Bitcoin continuing its sluggish trend, macroeconomic variables appear to be pressuring multiple asset classes together.

However, Beauchamp mentioned the possibility of market conditions improving in the fourth quarter (Q4) after the mixed trends in September. Currently, the strong dollar and the prospect of an October interest rate hike are limiting the virtual asset rally, and whether this week's US employment figures further solidify these interest rate forecasts has been cited as a variable that will determine future market trends.

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