“The Cycle Has Turned”: Bitcoin Faces a Decisive Month as It Holds Above $81,000

Bitcoin has extended its gains and established a foothold above $81,000, with on-chain indicators pointing to the start of a bullish cycle. The cryptocurrency’s next move may be determined by policy events scheduled for mid-September.

According to CoinMarketCap data on September 4, Bitcoin began climbing at about 8 p.m. on September 3 and briefly rose above $82,000. It was the first time the token traded above $82,000 since mid-May, roughly four months ago. Bitcoin is now trading in the low $81,000 range.

The advance came as U.S. Treasury yields eased and senior Federal Reserve officials delivered dovish remarks. Fed Governor Christopher Waller indicated support for leaving rates unchanged at the September Federal Open Market Committee meeting if August inflation data confirms that price pressures are cooling.

John Williams, president of the Federal Reserve Bank of New York, also recently said inflation expectations remain firmly anchored, signaling caution on further rate increases.

Cycle Shift Underway

Experts say Bitcoin is entering a transition phase in its market cycle. Crypto Dan, a CryptoQuant contributor, wrote that the short-term holder, or STH, SOPR indicator has finally rebounded after being suppressed for the past 11 months, calling it a sign that the cycle is turning.

SOPR, or Spent Output Profit Ratio, measures whether investors are selling Bitcoin at an average profit or loss. A higher reading typically suggests more investors are taking profits.

Investor sentiment has also improved, with the Crypto Fear & Greed Index remaining in “Greed” territory. Crypto Dan said the market is attempting to shift from a bearish cycle to a bullish one. While profit-taking has emerged whenever Bitcoin rises, the market has been absorbing that selling pressure.

Expectations have also been lifted by Bitcoin’s tendency to perform strongly in the fourth quarter. According to CoinGlass, Bitcoin posted an average fourth-quarter return of 77.07% over the roughly 12 years from 2013 through last year.

Chris Kuiper, vice president of research at Fidelity Digital Assets, said Bitcoin failed to decline further even after events that could have served as bearish catalysts, including a recent hardware wallet security incident and delays to the crypto market structure bill known as the Clarity Act. That supports the argument that the crypto market is nearing a bottom and searching for its next upside catalyst.

Clarity Act Vote Among Key Tests

This month could determine whether Bitcoin’s rally has further to run. A U.S. Senate vote on the crypto market structure bill known as the Clarity Act is scheduled for September 15, followed by the Fed’s September 16 FOMC meeting, where policymakers will decide on interest rates. CME FedWatch data showed the probability of a rate increase at this month’s meeting stood at 50.2% as of September 4.

A central question is whether the Clarity Act can pass. On prediction market platform Polymarket, the odds of the bill being enacted this year fell to 13% as of September 4, down from 27% a month earlier.

Fidelity said new Bitcoin bull markets have historically been supported by the continuation of its four-year cycle, the adoption of crypto-friendly regulation and shifts in monetary policy. It added that the direction and timing of final action on the Clarity Act, which remains under Senate review, are still uncertain.