Some experts suggest that the bearish trend of Bitcoin and the crypto market in general is repeating a historical pattern in the month of September.
From price drops to regulatory uncertainty, September brings with it a host of challenges that cryptocurrency investors need to consider.
According to Matt Hougan, Bitwise's chief investment officer, September has been Historically a difficult month for Bitcoin and the crypto market in general. Hougan published a recent report in which he makes a retrospective analysis of the trends in the cryptocurrency environment and a comparison with the current factors that could influence the performance of the crypto market this month.
September, a critical month for the price of Bitcoin
Since its listing on the stock exchange in 2010, Bitcoin has shown a notably negative performance during the month of September.
In report Why Are Septembers So Terrible?Hougan noted that Bitcoin’s price has historically trended lower this month. He cited data from Bitwise Asset Management to highlight that the leading cryptocurrency’s price has seen an average drop of 4,5% this month, making it the worst month of the year, in terms of performance.
In fact, according to the data, there have been drops in the price of Bitcoin in nine of the thirteen Septembers recorded to date, with the most devastating being in 2011, with a drop of 41,2%.
Source: Bitwise
Hougan stressed that this pattern of decline is not exclusive to Bitcoin, but that other risk assets, such as stocks, have also had to suffer significant corrections this month.
Factors influencing Bitcoin's downward trend
According to Hougan, the tendency of investors to make adjustments to their portfolios at the end of the third quarter is one of the main factors that directly influence the price correction of Bitcoin and risk assets. In addition to this, specific events, such as monetary policy announcements by major central banks and interest rate adjustments by the Federal Reserve, can also influence market and investor sentiment.
Hougan also highlighted that the Securities and Exchange Commission (SEC), which operates on an October-September calendar, has played a key role in the current uncertainty of the crypto market. Due to its fiscal cycle, September has been a critical month for regulation and enforcement.
In relation to this, last week the SEC issued a Wells notice directed at OpenSea, an NFT token marketplace, which has created great uncertainty in the market. Wells notices are notifications indicating that the SEC is planning to file charges against an entity. In relation to Opensea, this has created an environment of tension, as creators and investors fear that legal action may arise against this platform, one of the most important in the crypto market, in the near future.
In addition to Opensea, the SEC also charged the firm Galois Capital misleading investors and trading crypto assets as unregistered securities. Thus, amid this hostile regulatory environment, investors may become more cautious and reduce their exposure to cryptocurrencies, Hougan said, fueling bearish sentiment.
An opportunity for purchasing and growing asset holdings
Despite the corrections and declines that historically occur this month, some investors also see September as a month of buying opportunity and increasing their asset holdings.
Whales, or large cryptocurrency holders, often increase their long positions in September, which can be interpreted as a sign of confidence in a future market rebound. In the first week, Santiment reported that whales had been created 283 new wallets holding at least 100 BTC, reflecting the interest and ability of experienced investors to take advantage of market fluctuations to their advantage.
Bullish factors for the price of Bitcoin
In addition to historic declines and regulatory uncertainty, there are also reasons for optimism about Bitcoin’s future. According to Hougan, several factors could drive Bitcoin’s price in the coming months. One of the main aspects to consider is the market cycle. Historically, October has been a favorable month for Bitcoin, nicknamed “Uptober” due to its average performance of 30% increase in this month.
Furthermore, it should not be forgotten that institutional interest in Bitcoin continues to grow. Despite the recent outflows recorded by Bitcoin spot ETFs, investors are adopting these financial products faster than any other similar products in history. This suggests that in the long term, institutional adoption could provide solid support for Bitcoin's price and growth.
Hougan also noted that the current uncertainty in the cryptocurrency market could give way to a significant recovery as concerns ease. Like Hougan, many analysts believe that as policies and market direction become clearer, a significant rally in the prices of Bitcoin and other cryptocurrencies could be seen.
So the question many investors are asking is whether Bitcoin’s historic pattern in September is repeating itself this year. According to Hougan, “beyond seasonality, the most important thing is to look at the specifics of the market right now.” He noted that the upcoming presidential election in the United States could have a significant impact on the cryptocurrency market. Investors are awaiting greater clarity on the leadership and policies that will be implemented in the country regarding cryptocurrencies and blockchain technology.
IMPORTANT: The content of this article is for informational purposes only and, in no case, what is written here should be taken as investment advice or recommendations. Bit2Me News reminds you that before making any investment you should educate yourself and know where you invest your money, as well as the pros and cons of the system. We separate ourselves from the actions and consequences that ignorance may entail. If you decide to invest in this or another asset class, you are solely responsible for the consequences that your decisions and actions may have.
