Hey! Here comes another September, a new, fresh look to take oaths and chase your passions. But if you are into crypto, there’s one fact you should know. As summer fades, the crypto market tends to be unhappy, with prices often tumbling. Yes, September has historically been a slump month for crypto. And as winter looms, crypto is ‘uptober’ in October.
Why is crypto market down in September?
Falling leaves, falling coins in September
In September, cryptocurrencies have consistently underperformed, with Bitcoin hitting its lowest $230.26 in September, and the price of all major coins met their fate in the same month. Curious to know why this ‘September effect’?
Trend is the main and comes investor behaviour
Since 2014, the market has been hovering at the lowest prices — a trend that has been followed since then. After summer, investors tend to cash out their funds in crypto to earn profits or rebalance portfolios. The core aim is to reduce risk ahead of Q4.
September = macroeconomic
Macroeconomics matters a lot in September! Check the latest developments unfolding in the crypto:
- US Federal Reserve’s interest rate meetings
- US Jobs report
- Inflation data
These realities fuel uncertainty and doubt, and crypto, being sensitive, typically feels the pain.
Vacation mode leads to low liquidity and a lower price
Institutional traders and retail traders take off in July-August, leading to less activity in the realm. With few active participants, sell and buy orders decrease, creating a lull in the market.
Tax jitters shake crypto
Many institutions finalize their calculations on capital gains received from crypto between September – October, before the tax deadlines loom. Before the tax year ends, they may sell some of their assets to lock in profits.
Imagine you bought Bitcoin at $100,000 and now the price is $108,000. If you sell the coin in September, you gain $8,000 (capital gains). If the government gives a tax-free allowance, you will not have to pay any taxes. So, to gain profit without taxes, you have to sell Bitcoin, leading to downward pressure on prices.
Psychology follows crypto price
And, finally, psychology always matters in crypto! As the past years showed dips in September, investors believe in the trend that this downtrend will emerge every September in the future.
Average Bitcoin September decline
- 2013– 2014: –4.9%
- 2017: –7.72%
- 2018: –5.95%
- 2019: –13.88%
- 2020: –7.66%
- 2021: –7.03%
- 2022: –3.09%
However years 2015, 2023, and 2024 showed an uptrend in September.
So, why is crypto market uptober in October?
Typically, October is crypto’s favorite comeback month
Since 2013, Bitcoin has maintained positive momentum in October, except in 2022. Check these key price rallies in October, starting from 2017.
- 2017: +47%, moving the bull run to $20K.
- 2020: +28%, boosting the 2021 bull cycle.
- 2021: +40%, pushing BTC near its all-time high at $67,500.
Key reasons for the bullish momentum include,
End of seasonal sell pressure
After the deep sleep in September, crypto typically wakes up with a lot of energy in October. After the tax selling pressure and portfolio adjustment in September, sellers are exhausted, and they become more active in September, resulting in increased activity.
Psychology prevails
The psychological trend of ‘Uptober’ (Up + October) influences investors who believe that October is historically a month of gains.
Investors re-enter markets
After fewer activities in September, crypto investors, asset managers, and hedge funds often re-enter markets in October to get ready for year-end performance.
Big news acts as a catalyst
Historically, October has brought big news and events in crypto, including ETF approvals, halving cycles, and major crypto events. This also adds to the Uptober season.
Crypto always tends to struggle in September, weighed down by a mix of factors: seasonal investor behavior, low-liquidity volatility, and macroeconomic uncertainty. This year is no exception, according to reports. At press time, Bitcoin had slipped to around $107,000, whereas Ethereum scaled to $4,300. Meanwhile, crypto is Uptober after bearish forces fade, positive sentiment creeps, and institutions return.
So, will crypto boil in pain this September only to recover in strength come October?
