September has long been a tough month for U.S. stocks, and Bitcoin seems to follow a similar pattern. The so-called “September Effect,” a phenomenon well-documented in financial markets, appears to be taking its toll on the cryptocurrency, as Bitcoin’s price slumped by over 8% in the first week of the month.
The “September Effect” has impacted Wall Street for nearly a century, with the S&P 500 falling 55% of the time in this month since 1929, according to data from Open Markets. Analysts cite factors such as traders’ holiday schedules and financial firms’ fiscal calendars as possible causes for this consistent decline.
Although Bitcoin’s history is much shorter, the cryptocurrency has also struggled in September. According to CoinGlass data, Bitcoin’s price has dropped eight times in September since 2013, making it the worst-performing month on average. Only two months—September and June—have shown consistent declines for Bitcoin, with September averaging a 5% loss over the past decade.
This year, Bitcoin has already fallen by more than 8%, surpassing its typical September drop. Yet, not all traders are convinced that this trend is a reliable predictor of future performance. Jake Ostrovskis, an OTC trader at Wintermute, noted that while the market focuses on the “September Effect,” the limited sample size makes it difficult to use as a leading indicator. Last year, Bitcoin defied the trend and posted a nearly 4% gain in September.
Ostrovskis added that factors such as liquidity trends, macroeconomic conditions, and market sentiment are better indicators of Bitcoin’s short-term price action than the time of year. Zach Pandl, managing director of research at Grayscale, echoed this view, pointing out that Bitcoin’s historical performance in October and November often offsets any September weakness. In fact, after an average 5% September drop, Bitcoin has posted gains of 22% in October and 46% in November since 2013.
With potential Federal Reserve rate cuts on the horizon and growing institutional interest in Bitcoin, many investors may choose to look beyond the September slump and focus on the cryptocurrency’s improving fundamentals.
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