The summer of 2022 that just ended was tough for cryptocurrencies, but unfortunately some clues show that September was even worse for Bitcoin and other digital assets, based on seasonality and other factors.
In fact, September has historically been one of the worst months of the year for Bitcoin, with the cryptocurrency having posted a bearish record for this month every year since 2017. On average, the cryptocurrency has indeed lost 8.5% during the last 5 months of September.
Bitcoin Seasonality and Unfavorable Correlation in September
“September is probably going to be another volatile month,” Shawn Cruz, head of trading strategy at TD Ameritrade, said in an interview. “The risk is on the downside,” he said.
Remember that the cryptocurrency market has been damaged since the beginning of the year due to the increase in central bank rates, led by the US Federal Reserve. BTC is indeed down more than 50% since the beginning of the year, and other cryptocurrencies have lost much more.
We have also been able to observe an increasingly significant correlation between Bitcoin and American stocks, especially technology stocks, since the beginning of the year. However, just like Bitcoin, September has historically been a bad month for US equities, and this year is unlikely to be any different given the current environment of high inflation and fears of a recession.
Therefore, in addition to its own seasonality, Bitcoin could suffer during this month from its correlation with US technology stocks, although it should be noted that not all analysts have a bearish view on BTC.
The fate of Bitcoin in September will ultimately depend on the Fed
In this regard, it is recalled that the next Fed meeting on September 21 is the next key event, regarding US equities and Bitcoin. In fact, this Fed meeting will be decisive for Bitcoin’s ability to end the month up, or on the contrary to confirm its historical tendency to fall in September.
The consensus is currently expecting a more than 70% chance of seeing the Fed hike rates by 0.75% for the third time in a row, which could punish the cryptocurrency, especially if the combined This steep rate hike was sustained by a verbal promise. strongly hawkish monetary policy until inflation is brought under control.
To a lesser extent, it should be noted that next week’s ECB meeting may also affect the price of Bitcoin. Since last weekend, expectations of this meeting have increased, so much so that the market now expects the ECB to raise its rates by 0.75%.
In the case of the Fed and the ECB, it should be noted that there would be a rate increase of only 0.50% so a dovish surprise against which it will undoubtedly be interesting to buy Bitcoin. Note that the cryptocurrency could also rise if the central banks raise rates by 0.75%, but they have combined this decision with a promise to slowly raise rates from there.
BTC/USD technical forecast update for September
At the beginning of September, the technical context is still bearish for Bitcoin, as evidenced by the descending trend line seen on the daily chart below:
The crossing of this trendline, which is currently located around $25,000, graphically, is the first condition to be met in order to expect a permanent upgrade for Bitcoin.
But before that, BTC will also have to cross another major barrier, the 100-day moving average, which is currently located around $23,200. In summary, the chart analysis tends to confirm the expectation that September will be difficult for Bitcoin.
If the cryptocurrency indeed fails to be above $20,000 and increases its losses, the low level this year around $17,600 will be the main threshold to watch. Below, there will be few possible supports before the psychologically important threshold of $15,000.
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