As September draws to a close, Bitcoin is on track to end the quarter with its first quarterly decline of the year. The largest cryptocurrency has fallen approximately 11% since June and was trading at around $26,970 on Saturday in New York. Earlier this year, Bitcoin experienced a surge of 83% in the first six months, recovering from a 64% drop in 2022 due to scandals and bankruptcies in the digital asset sector.

Since the second quarter, Bitcoin has been stuck in a narrow trading range due to an uncertain macroeconomic outlook. The Federal Reserve recently announced that it would not be changing interest rates, but it hinted that rates would remain elevated for a longer period of time. Higher interest rates typically reduce the appeal of riskier assets.

Hosam Mahmoud, a research analyst at CCData, stated that the Federal Reserve’s hawkish stance has increased investor apprehension, resulting in declines in both traditional and digital asset markets. According to a report by CoinShares, investors have withdrawn nearly half a billion dollars from cryptocurrency products over the past nine weeks, with Bitcoin accounting for 85% of the outflows, totaling $45 million.

The US Securities and Exchange Commission (SEC) recently postponed decisions on several Bitcoin exchange-traded fund (ETF) proposals, including those from BlackRock Inc., Ark 21Shares, and GlobalX. This has dampened the excitement among current investors who were hoping for a Bitcoin ETF to drive demand. Peter Tchir, head of macro strategy at Brean Capital, noted that owning crypto is no longer difficult, so the delay in the approval of a Bitcoin ETF may not have as significant an impact as it would have a few years ago.

However, some Bitcoin advocates believe that the increasing likelihood of a US federal government shutdown could trigger a rally similar to the one that occurred earlier this year in response to the regional bank crisis. In March, Bitcoin surged approximately 25% over a one-month period when three small- to mid-size US banks failed within five days.

Will Tamplin, senior analyst at Fairlead Strategies, suggested that there are signs indicating that Bitcoin’s corrective phase is coming to an end. The cryptocurrency has surpassed its 50-day moving average and has shown improved momentum following oversold conditions.

In conclusion, Bitcoin is expected to experience its first quarterly decline of the year, with a decrease of approximately 11% since June. Factors such as the Federal Reserve’s hawkish stance, investor withdrawals from cryptocurrency products, and delays in approving Bitcoin ETFs have contributed to the decline. However, the prospects of a US government shutdown and signs of Bitcoin’s corrective phase maturing give some hope for a potential turnaround.