Matt Hougan, founder of ETF issuer Bitwise, analyzed the data and reasons for " why September always falls " in the sluggish September market, and is optimistic that as uncertainties begin to dissipate in October and November, there will be Saw a huge rally in BTC.
( Another month? Historical data: Bitcoin always falls in September and rises in October )
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ToggleHistorical data: Bitcoin fell by an average of 4.5% in September
Since Bitcoin began trading in 2010, the asset fell an average of 4.5% in September, making it its worst month, with August and September the only times of the year to post negative average returns.
Looking at the detailed data, September has fallen in nine out of thirteen years. September 2011 was the worst month ever, with a 41.2% drop. As of the reporting deadline this month (9/8), Bitcoin has fallen by 7%.
Why does September always fall?
There is a lot of discussion about what drives the September effect. Matt Hougan summarizes three main factors:
Nearly all risk assets fell in September
Bitcoin isn’t the only asset suffering. Since 1929, September is the only month in which stocks have fallen more often than they have risen. This effect is particularly evident in the Nasdaq 100 Index, which is dominated by technology stocks.
Economists have tried to attribute it to a variety of factors, including increased volatility after the summer slowdown and mutual fund losses at the end of the fiscal year, but no one is quite sure why.
Whatever the reason, it's happening again: As of Friday, September 6, the Nasdaq 100 was down nearly 6% for the month.
SEC enforcement season puts pressure on cryptocurrencies
SEC runs from October to September every year. Historically, this means September tends to see a large number of enforcement actions as the SEC attempts to hit performance levels for the year. Many predict that by the end of September, lawsuits and settlements against cryptocurrency entities will be even more significant.
( SEC crypto fines will be nearly $5 billion in 2024, an increase of 3,018% from last year )
people's psychological expectations
Hougan thinks the most reasonable explanation might be that it's just self-reinforcing psychology! Because people now expect September to be bad, and those expectations drive the market.
Will Bitcoin usher in an Uptober?
By contrast, Bitcoin investors have historically loved October, nicknamed the “Uptober,” thanks to an average 30% gain in Bitcoin during the month. Historically, October and November are among the best months for cryptocurrency investors.
Hougan believes that in addition to seasonal factors, the most important thing is to pay attention to the specific conditions of the current market. There are still many uncertainties in the market, including:
- The U.S. presidential election will have a major impact on cryptocurrencies and is currently a difficult thing to predict
- The timing and size of the Fed's interest rate cuts have sparked fierce debate. Despite widespread belief that easy money is on the way, investors are feverishly recalibrating their bets: The odds of a 50 basis point rate cut in September have fallen, but the odds of a cumulative rate cut of more than 125 basis points by December have risen.
- ETF flows have been mixed. While inflows into Bitcoin and Ethereum ETFs have softened, investment advisers are adopting Bitcoin ETFs faster than any new ETF in history
Hougan still believes that as this uncertainty starts to dissipate in October and November, we will see a sharp rebound. The fact that this is consistent with historical trends may just be a coincidence, but he is ready.
