What History Tells Us About the September’s Fall Trend

Bitcoin has had an exciting year so far, reaching an all-time high of over $73,000 in March 2024. Since then, the price has pulled back somewhat, leaving us to wonder what’s going on with the world’s largest cryptocurrency.

The current price of around $57,500 is still strong historically, but it does represent a drop from the highs seen earlier this year. There’s no need to panic though — September has been a weaker month for Bitcoin, so some decline was almost expected.

In this post, you will learn three key factors contributing to market fluctuations during September. Let’s delve into a Bitcoin price analysis to provide insights for those looking to buy Bitcoin with a debit card.

September’s Price Change Each Year

In 2021, Bitcoin entered September flying high above $50,000. But by month’s end, it had shed over 20% and dipped below $41,000. Major catalysts included an intensifying Chinese crypto crackdown and the end of futures contracts. Still, Bitcoin’s September swoon was mild compared to years past.

Cast your mind back to 2018, when Bitcoin plunged from around $7,400 to under $6,000 in September — a 25% fall. That year’s drop was fueled by the rejection of a Bitcoin ETF application and an escalating trade war between the U.S. and China.

Or how about September 2019, when Bitcoin lost over 30% amidst a hash rate decline and regulatory turmoil? Even during 2017’s iconic bull run, Bitcoin took a brief September breather, sliding from over $4,800 to $3,800 before resuming its meteoric rise.

While each September selloff has its distinct narrative, the overarching theme is consistent — Bitcoin sheds value as the summer ends. Maybe it’s investors taking profit, or macro uncertainty shaking confidence.

So what tends to cause these September declines?

3 Possible Reasons for Historical September Declines

There are a few potential contributing factors to why this fall slump happens annually:

1. Market Cycles

September represents a transitional period in the markets when summer is ending and the final quarter of the year is ahead. During this time, investors may rebalance portfolios after assessing their positions from earlier in the year. This rebalancing act tends to involve profit-taking and reductions in riskier assets like bitcoin, exerting downward pressure on price.

2. Macroeconomic Factors

September is packed with key economic data releases and policy decisions. Employment figures, inflation reports, interest rate changes, and more — all occur during this month.

As investors digest the implications of new economic information, confidence and appetite for risk can shift rapidly. Bitcoin, which lacks inherent cash flows and is valued on market demand, can face amplified price swings from macro developments. Its price may act as a Bitcoin price analysis barometer for global economic sentiment.

3. Annual Financial Settlements

September is when many large institutions like banks, hedge funds, and corporations finalize their financial statements and settle positions for year-end. It increased trading volume and the need to balance accounts can impact markets. With Bitcoin markets being thin, large orders from institutions closing books could exert outsized effects on Bitcoin prices.

While it is difficult to pinpoint one exact driver, September has been rough for Bitcoin historically. The above factors contribute to the bearish tone seen this month as part of broader market cycles and systemic flows. Given Bitcoin’s high volatility, it is impossible to predict future price action based on seasonal patterns.

Of course, Bitcoin price analysis is never simple. There are always many factors at play that can influence its price movements.

2024 September Price Drop: 5 Theories

Here are some leading theories behind the September 2024 Bitcoin price plunge:

1. Market Impact of Silk Road Bitcoin Sell-Off

When the US government auctioned off $600 million worth of Bitcoins seized from the Silk Road dark web marketplace, it had an outsized impact on Bitcoin’s thinly traded market. These Bitcoins accounted for less than 1% of the total Bitcoin supply.

When they were all dumped onto exchanges, it created tremendous selling pressure that triggered stop losses and liquidations. This mass sell-off was a major catalyst behind Bitcoin’s steep decline in September 2024.

2. Technical Breakdown and Big Sellers Push Prices Down

According to market analysts, Bitcoin’s price chart formed a head-and-shoulders top pattern preceding the September crash. This technical breakdown was a warning sign of growing selling momentum. Once Bitcoin broke below key support levels of around $50,000, it triggered a cascade of stop-loss orders that accelerated the price decline.

Large Bitcoin whales likely contributed to the selloff by selling portions of their holdings. With thin liquidity in the market, these huge trades by whales and institutions were enough to push prices off a cliff. The whales likely sold to realize profits from Bitcoin’s meteoric rise earlier in the year.

3. Miner Capitulation Drives Down Price

Some experts point to miner capitulation as a factor in Bitcoin’s steep price drop. As Bitcoin’s price declined through August and September, many miners were forced to shut down older-generation equipment that was unprofitable at lower price levels. These miner capitulations produced additional selling pressure to drive prices even lower.

4. Regulatory Crackdown and Investor Panic

Governments worldwide have been eyeing the crypto space with increasing scrutiny, and rumors of impending regulatory crackdowns can often spook investors. In September 2024, rumors of stricter regulations in major economies like the US and EU started circulating, causing some investors to panic and sell off their Bitcoin holdings. Fear and uncertainty can be powerful drivers in the crypto market.

5. Whale Games and Market Manipulation

Let’s not forget the age-old theory of market manipulation by whales — the big players in the crypto game. Some believe they triggered the September price drop by orchestrating a coordinated selloff. By causing panic and driving prices down, they could scoop up more Bitcoin at lower prices, only to pump the market back up later. It’s a risky game, but one that some whales are rumored to play.

Summary

While short-term price moves may seem dramatic, the long-term investment case and adoption trajectory for Bitcoin remains intact. By better understanding these risks, investors can navigate temporary declines and capitalize on attractive buying opportunities.