September Outlook Uncertain for Bitcoin Amid Weakening Spot Demand

Bitcoin's August rally has left many wondering what September will bring, and recent data suggests that investors are losing conviction. Despite closing out August with a 24% return on investment (ROI), marking its best monthly performance since the 2017 cycle, Bitcoin's spot demand is weakening.

A significant short squeeze occurred in August, with over $6.55 billion in shorts liquidated and nearly two-thirds of total liquidations coming from bearish traders. However, this may not necessarily be a sign of strong buying power, as many leveraged positions have been liquidated and the market has reset.

The increase in funding rates on Binance, up over 42% in less than a week, suggests that investors are bullish, but this is being offset by bearish signals. The trend of smaller holders accumulating Bitcoin while STHs (Savers To HODLers) cash in when the market turns risk-off may also be weighing on investors.

ETH/BTC is sitting at a key breakout level, but with sentiment turning bearish and spot demand weakening, BTC's setup looks less convincing. If ETH/BTC breaks higher while BTC struggles, it could signal that capital is rotating away from Bitcoin, adding further pressure to the September outlook.