Historical data reveals September potential

September is regarded by many investors as the "dark month" of the cryptocurrency market, especially for Bitcoin. Historical data shows that the average loss rate in September was as high as -6.18%, and the median loss rate was also as high as -4.43%. While historical trends are often not a complete guide in the cryptocurrency market, as an asset with a market capitalization of more than $1.2 trillion and a trading history of more than 11 years, Bitcoin’s price action is still worthy of attention. However, this September may not be as sluggish as usual, according to expert analysis from Spot On Chain, which has come up with 5 key signs that may indicate that Bitcoin is on its way out of trouble.

Sign 1: Possibility of historical reversal

While historical data shows that September tends to be one of Bitcoin’s worst performing months, interestingly, 43% of negative August performances tend to lead to subsequent positive Septembers. This means that despite generally negative market sentiment, there is still a chance of a rebound in September. Therefore, experts believe that this September will not necessarily continue the downward trend of the past.

Chart source: Spot On Chain Bitcoin monthly returns since 2013

Sign 2: Selling pressure decreases, position holders increase

In addition to the possibility of a reversal of historical trends, another key factor is that the selling pressure in the market has decreased significantly. According to the latest data, the German government, Mt. Gox and Genesis Trading have sold more than 170,000 Bitcoins in July and August. In addition, although the U.S. government still holds more than 203,000 Bitcoins, it has recently chosen to sell them through over-the-counter transactions to reduce the impact on the market. With less activity from large sellers, selling pressure in the market is reduced, which may help Bitcoin price stability.

Chart source: CryptoQuant Bitcoin’s long-term net position change (30 days)

Meanwhile, long-term holders have remained steadfast, adding 262,000 Bitcoin to their holdings in August alone, and these long-term holders now control 75% of the total Bitcoin supply. This shows that they are confident in the future of Bitcoin. In addition, several anonymous wallets holding large amounts of Bitcoin have remained silent recently, further reducing the risk of a sudden market sell-off.

Sign 3: Expected Bitcoin ETF inflows

The possibility of Bitcoin ETF (exchange-traded fund) inflows also provides positive expectations for the market. Although net ETF flows declined slightly in August, September could see positive inflows of $500 million to $1.5 billion based on historical monthly volatility trends, which would further boost sentiment. As ETF investment increases, more traditional investors may set their sights on Bitcoin, driving the price higher.

Sign 4: Interest rate changes and market demand

In addition to the impact of ETFs, the Bitcoin market in September may also be affected by the U.S. Federal Reserve’s possible interest rate cut decision. If the Federal Reserve decides to cut interest rates, it will promote market liquidity and further attract more investors to the Bitcoin market. In addition, the news that FTX may return $16 billion in cash may also stimulate market demand and provide a new growth point for Bitcoin.

Source: Bloomberg Historical inverse relationship between interest rates and Bitcoin price

Sign 5: Increased regulatory support for cryptocurrencies

Support for cryptocurrencies is growing among U.S. politicians, bringing more confidence to the market. As more politicians begin to support regulations favorable to cryptocurrencies, investor confidence gradually increases, which may further push the price of Bitcoin higher in September. Especially in the past few months, discussions on cryptocurrency regulation have become increasingly frequent. If relevant policies can be clear and robustly implemented, this will have a positive impact on the market.

Further reading
SEC fines 3 billion magnesium in ten years! Why highlight the lack of regulation in the United States? Let Crypto Mom Tell You
Global encryption regulation is accelerating change! When sorting out important policies in the United States, Europe, and Asia, what developments should we pay attention to?
Supervision should not be done in different ways! World Economic Forum: Crypto regulation is best a “global framework”

Is September still worth looking forward to?

While September is traditionally seen as one of the worst months for Bitcoin, the market may be different this year. According to analysis by Spot On Chain, reduced selling pressure, confidence among long-term holders, ETF inflows, expectations of a rate cut by the Federal Reserve, and increasing regulatory support are all key signs to watch. Together, these factors may have contributed to September’s Bitcoin rally and even set the stage for a future bull run.

For investors, paying close attention to these market trends and adjusting strategies in a timely manner will be the key to coping with market fluctuations in September. Regardless, this month will be a critical moment for Bitcoin to move to the next stage.

[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.