Bitcoin Enters A New Seasonal Cycle ?

September, long synonymous with a downturn for bitcoin, seems to be losing its curse. This historically unfavorable month for risky assets is starting, for the third consecutive year, a contrary dynamic. Supported by a flexible macroeconomic context and structuring institutional flows, the market is giving signs of maturity. The queen of cryptos no longer suffers the calendar: she redefines it.

The legacy of a black month : six years of decline before the rebound

Between 2017 and 2022, bitcoin systematically closed the month of September in the red. This series of six consecutive declines has deeply anchored the reputation of the “red September” in the crypto imagination, while the market cautiously begins this period .

These disappointing performances were the result of a series of geopolitical, regulatory and financial events, often violent, that slowed the market’s momentum. Several key episodes illustrate this negative dynamic:

• September 2017 : the People’s Bank of China banned fundraising through certain methods on September 4, causing an immediate drop in bitcoin. South Korea followed suit on September 29.

• September 2018 : a press release claimed Goldman Sachs gave up launching a crypto trading team. The information, later qualified as “fake news” by the bank, caused BTC to plunge below $7,000.

• September 2019 : the failed launch of the Bakkt platform, supposed to offer regulated exposure to bitcoin for institutional investors. Three days after its launch, bitcoin dropped from nearly $10,000 to less than $8,000. Binance Research cited a “disappointing start” as the cause of the decline.

• September 2020 : despite growing interest in bitcoin as a safe haven asset, investor attention shifted to Ethereum amidst DeFi frenzy. ETH dominance rose sharply that month.

• September 2021 : new shock wave from China, banning mining and crypto trading across its territory. Regulatory pressure pushed the market down.

• September 2022 : after the Terra/LUNA crash shock in May, the Fed raised interest rates for the fifth time this year by 75 basis points. Aggressive monetary policy amplified risk aversion.

This accumulation of successive shocks, combined with a general aversion to risky assets at this time of year, forged September’s reputation as the most unfavorable month for bitcoin.

This trend is also consistent with that observed in traditional markets. The S&P 500 has historically shown its worst performances during this month, according to Yardeni Research data .

The emergence of a structured bullish cycle

This dark legacy seems, however, to have been broken in 2023, when bitcoin posted a monthly gain of about 4 %, driven by a major judicial decision in the United States.

On August 29, a federal appeals court called the SEC’s rejection of Grayscale’s request to convert its Bitcoin trust into a spot ETF a “arbitrary and capricious decision”. This event revived confidence in the upcoming approval of a spot Bitcoin ETF, an anticipation that materialized in early 2024.

“Such a decision forced regulators to rethink their stance”, emphasized Eric Balchunas.

The climate was then conducive to a rise, and September 2024 saw bitcoin record a record increase of +7.29 %, its best historical performance for this month, according to CoinGlass data .

Several macroeconomic factors strengthened this dynamic. On September 18, 2024, the Fed made its first rate cut since March 2020, a shift welcomed by the markets. At the same time, World Liberty Financial’s launch fueled the political narrative around a return to grace for cryptos.

This combination of bullish signals fuels a transition to what some already call “Uptober”, referencing the historically favorable month of October for bitcoin, with six consecutive years of gains.

At the dawn of this September, the trend may well confirm itself. Spot Bitcoin ETFs record daily trading volumes amounting to billions of dollars, while the Fed, through Jerome Powell’s voice, adopts a resolutely flexible tone during his last speech at Jackson Hole.

“The rebalancing of risks could justify an adjustment of our monetary policy”, he declares , referring to the upcoming FOMC meetings scheduled on September 16 and 17. Added to this are rumors from China of a possible authorization of stablecoins pegged to the offshore yuan. In this context, a new rate cut is anticipated and could serve as a catalyst for a third positive September.

If favorable signals hold, bitcoin could definitely turn the page of the “red September” and enter a new bullish dynamic in the crypto calendar. However, it remains to be seen whether this emerging trend reflects a structural market evolution or a momentary situation boosted by US monetary policy positively influencing global finance .