Analysts predict tough September as bitcoin falters after ETF delay
September is typically a down month for BTC. Add a slow-moving SEC, rising deficits and uncertain Fed, and things don’t look so good
Wit Olszewski/Shutterstock modified by Blockworks
Bitcoin could be headed for a historically low month — particularly given some volatile macroeconomic factors.
August’s final trading day saw bitcoin give up its gains Thursday on news that the US Securities and Exchange Commission once again delayed decisions on a bitcoin spot ETF.
More broadly, September has been a red month for bitcoin for the past six years. The S&P 500 similarly struggles at the end of the summer, averaging a 3.2% loss in September for the past five years.
“Even in 2021, during the final upward leg of the last bull cycle, [bitcoin] (BTC) lost 7% in September only to gain 40% the following month,” Noelle Acheson, author of Crypto is Macro Now and former head of market insights at Genesis, wrote in a newsletter Friday.
“Times are different now, however. In September 2021, bond yields were around 1.1%, the S&P 500 was up a whopping 40% year-to-date, risk sentiment was high and BTC had already gained over 60% since early January,” Acheson added.
The Federal Reserve is scheduled to release its next interest rate decision on Sept. 20, along with the central bank’s summary of economic projections. Markets are currently pricing in 93% probability that the Fed will opt for another pause and keep interest rates where they are, around 5.25%.
Last month, Fed Chairman Jerome Powell reiterated that the economy is proving more resilient than central bankers originally anticipated. He suggested more aggressive rate increases might be necessary down the line.
“Since inflation exploded last year, the Fed has been more closely focused on the so-called ‘super-core’ inflation rate, which is Core Services PCE less Housing,” said Tom Essaye, founder of Sevens Report Research. “That figure jumped considerably to 3.9% from 3.2% in June.”
The Fed will lean hawkish, Essaye predicted, which markets and cryptos have not yet priced in.
Crypto investors should also keep an eye on the growing US budget deficit, Acheson advised. An increased deficit means more debt issuances, but with lower global demand for American government debt and a central bank that’s trying to cut its balance sheet holdings, buyers could be in short supply.
“True, the Fed could be encouraged to change its strategy in case of urgent need, in which case we would be back to the money-printing days of 2020-21,” Acheson said. “This should lead to a scenario where yet again BTC outperforms stocks given its sensitivity to liquidity, its inverse relationship to the dollar and its detachment from the economic doldrums affecting the world’s large economies.”
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
- Empire: Start your morning with the top news and analysis to inform your day in crypto.
- Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
- 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
- Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
- The Drop: For crypto collectors and traders, covering apps, games, memes and more.
- Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
