Bitcoins (BTC) AND Ethereum (ETH) started September in the red, having already suffered price declines since the beginning of the month. This bearish sentiment towards the most significant cryptocurrencies and, by extension, the broader cryptocurrency market is due to several macroeconomic factors.

The market is still feeling the effects of the yen carry trade

Recent events indicate that Bitcoin and Ethereum are still feeling the effects of abandonment Yen TradingThe yen has recently surged against the US dollar, suggesting that investors are continuing to sell riskier assets such as these cryptocurrencies to close out their carry trade positions that have been taking advantage of the low-yielding yen.

WX (formerly Twitter) fastinghedge fund manager James Lavish He also suggested that carry trade effects on the yen were still at play. He noted that the Nikkei 225 was down 3.7% while the USD/yen trading pair was heading lower.

Bank of Japan (BOJ) Kazuo Ueda has also recently adopted hawkish policies statement that they will continue to raise interest rates if the economy and prices behave as expected. This also created fear among traders and prompted them to close carry trade positions, thus putting more selling pressure on Bitcoin and Ethereum.

Bitcoin and Ethereum suffered great losses during August 5th market crashwhich was prompted by the BoJ’s decision to raise interest rates for the second time since 2007. Bitcoin, for its part, fell below $50,000, while Ethereum fell to just $2,200. As such, given the effects of the yen carry trade and the BoJ’s hints at further interest rate hikes, Bitcoin and Ethereum risk further price declines.

US Stock Market Crash Contributes to Bitcoin and Ethereum’s Downfall

In addition, the correlation between Bitcoin and Ethereum with American Stock Exchange also contributed to their price crash since early September. More specifically, on September 3, over $1.05 million was wiped from the exchange, which also sparked fear in the cryptocurrency market and led to a wave of selling Bitcoin and Ethereum.

This was evident in the outflows that were seen on the day for both Spot Bitcoin and Ethereum ETFs. Data from investors from Farside showed that Spot Bitcoin ETF AND Spot ETFs Ethereum recorded a total net outflow of USD 287.8 million and USD 47.4 million, respectively.

With such a bearish outlook for Bitcoin and Ethereum, a spark is urgently needed that could provide bullish momentum for the cryptocurrency market. Members of the cryptocurrency community are hoping that the US Federal Reserve will cut interest rates next FOMC meeting is set to take place between September 17 and 18, which will bring some relief to the market and assist inject more liquidity into Bitcoin and Ethereum.

At the time of writing, Bitcoin and Ethereum are valued at around $57,160 and $2,400, according to data from CoinMarketCap.

Featured image created with Dall.E, chart from Tradingview.com