Could the U.S. equity market become a catalyst for crypto this September?
Technically speaking, U.S. stocks had a bullish August in general. The S&P500 index crossed the 7800 level and recorded a new absolute maximum, closing up by about 2% for the month.
Compared to Bitcoin’s almost 25% gain, it becomes evident that there was a much more substantial rotation of capital towards digital assets over traditional stocks as the broader market turned back to risk-on.
However, market players are already starting to grow wary that this uptrend can continue through September, as there are two major factors that might turn the situation around.
First, the markets are already pricing in roughly a 60% chance of a Fed rate hike at the upcoming FOMC meeting, which is a significant jump from roughly a 37% chance just a week ago.
This makes Bitcoin more sensitive to the situation going into September following its aggressive August ramp.
Interestingly, investors appear to have positioned their bets for this scenario already.
Based on CryptoQuant’s data, Bitcoin’s Coinbase Premium Index remains under pressure, indicating a relative weakness in spot buying by the U.S. investors. This lack of U.S. demand could leave Bitcoin more vulnerable if traditional markets turn risk-off.
Notably, this is where the second bearish factor is likely to come into play: the upcoming CLARITY Act vote.
With the FOMC meeting and CLARITY Act vote on the agenda, the downside risk is becoming a reality. Despite that, the U.S. equities can become an important catalyst for Bitcoin [BTC] during this period of uncertainty, which attracts all the attention to the tokenization market.
Bitcoin may ride the growing tokenized equity wave
The timing of these bearish catalysts could not have been better.
The logic is straightforward: Risk-on momentum is cooling and liquidity is still ramping on the chains: Ethereum gained $442 million, Tron added $253 million, XRPL $91 million, and Hyperliquid L1 $76 million.
Given the trend of increasing on-chain liquidity in the face of diminishing risk appetite, it is reasonable to conclude that the tokenization narrative is beginning to acquire greater conviction.
As reported by Kobeissi Letter, on-chain tokenized equity holders have hit a record 1.9 million, representing a 134% increase month-over-month. This compares to less than 100,000 tokenized equity addresses just 10 months ago.
Jupiter on Solana is fueling the surge, with 61% of tokenized equity volume on the platform. Meanwhile, the number of active tokenized equity traders on Jupiter increased by 46% month-over-month.
In short, demand for tokenized US equities is skyrocketing.
That puts the spotlight back on the September setup, where the bearish scenario for traditional stocks due to the rising rate-hike expectations and the upcoming CLARITY Act vote could be a major liquidity and risk-on catalyst for Bitcoin and the overall crypto market.
If this plays out, Bitcoin could very well outperform equities again this month, like it did in August, setting this up as a critical scenario to watch.
Final Summary
- Fed rate-hike fears and the CLARITY Act vote could hurt stocks but may push more liquidity into crypto.
- With tokenized U.S. equities growing fast, Bitcoin could outperform stocks again in September.
