Are Bitcoin investors falling for the market’s “September Trap”?
In terms of positioning, traders are becoming more long biased on Bitcoin, implying they expect a bullish move that the technical formation has yet to confirm.
Because from the technical standpoint, BTC has been trading below $80k for more than two weeks, which keeps the risk/reward equation in check.
However, the setup on the chart below implies that the bulls are willing to risk a lot for a big reward.
According to CoinGlass data, Bitcoin’s funding rates are positive, and the long/short ratio has jumped to 1.08 from below 1 over the past week. Moreover, it is the highest ratio of long positions since the mid-August cycle.
In essence, the traders are expecting a breakout above Bitcoin’s current resistance.
However, it must be noted that not everyone is optimistic.
In this context, it becomes critical to take a closer look at the on-chain situation. And so far, it’s suggested that there is even a clear bias forming.
The catch, though? Either way, Bitcoin [BTC] stands at serious risk of creating a September trap.
Bitcoin rally meets weak sentiment
Bitcoin enters September with bearish positioning and weakening market signals.
According to Santiment data, Bitcoin closed August nearly 25% higher than it opened; however, the sentiment did not follow suit. BTC price climbed from roughly $64.7k to $78.3k, marking one of its strongest August performances.
And yet, Santiment’s Sentiment Balance averaged only +32, compared to +72 that was recorded in July, when Bitcoin traded at around $63k. So, in contrast to the strong rally, market participants remained rather bearish.
While this alone supports the ongoing “September trap” narrative, ETH/BTC is adding yet another layer to the setup. The pair closed the month above its 20-month moving average, which suggests that Ethereum could be gaining momentum against Bitcoin.
If this trend holds, Bitcoin dominance could come under further pressure, creating another headwind for BTC in September.
With this in mind, the analyst’s Bitcoin short call makes more sense. Weaker on-chain data, negative sentiment and a stronger ETH/BTC setup point to more downside risks for BTC.
So, could this positioning be an early signal that Bitcoin’s “September trap” is in play? As the chart above shows, bullish Augusts have often set the stage for a weaker September. Should this be a repeat performance, then BTC could face another correction as the month progresses.
Final Summary
- Bitcoin rallied in August, but weak sentiment and on-chain data are raising downside risks.
- With ETH/BTC gaining strength, BTC could be heading into another “September trap.”
