Why September May See Another Bitcoin and Crypto Price Drop

• Crypto assets saw a 13.1% drop in their total market capitalization in August, driven by recession fears.
• Bitcoin fell 11.1% in August, while Bitcoin ETFs saw net outflows of $142 million.
• The crypto market is currently facing uncertainty, which may continue until October, Bitwise notes.

Cryptocurrencies saw steady declines in August, with the overall market cap falling more than 13% due to weak unemployment data and heightened recession fears, according to Binance’s monthly report. Bitwise Chief Investment Officer Matt Hougan also noted that increased market uncertainty may continue into October.

The Bitcoin and crypto market could be set for another rough September

Several cryptocurrencies underperformed in August as Q3 ’24 draws to a close. The performance was characterized by a 13.1% drop in the overall crypto market cap, according to Binance Research.

Some notable causes of the market decline include weaker-than-expected US macroeconomic data and the unwinding of the Japanese yen’s carry trade on August 5.

Bitcoin’s monthly decline was 11%, while BTC ETFs saw net outflows of $142 million. Altcoins like Ethereum and Solana were both down more than 24% in August. Ethereum saw a drop in on-chain activity during the month, with increased Total Value Locked (TVL) outflows.

Solana has also seen a drastic drop in meme coin trading, leading to a 27.7% drop in the trading volume of decentralized exchanges on its blockchain. Binance has suggested that the drop in trading volume could be the result of pullbacks that have taken place with several projects on its network, sparking heightened fears among investors.

What to expect from crypto in September

As the market tries to recover from an eventful August, cryptocurrencies may repeat a similar performance in September.

According to Chief Investment Officer Matt Hougan, September is one of two months in which Bitcoin has a negative average return.

Hougan said Bitcoin has fallen an average of 4.5% in September since it began trading in 2010. This is largely due to increased negative sentiment around the general investment market.

“Bitcoin isn’t the only asset suffering from back-to-school. Since 1929, September is the only month in which stocks fall more often than they rise,” Hougan noted.

Bitcoin is down more than 2% this month as uncertainties plague the overall market. The asset fell below $54,000 on Friday – its lowest price since August 5 – before recovering on Monday.

However, Matt Hougan notes several factors that could lead to a reversal of fortunes for the asset. These include the upcoming presidential election, along with the possibility that the Federal Reserve (Fed) will cut interest rates by 50 basis points later in the month.

The crypto market may continue to experience rough price movements in September before seeing a recovery in October, which has historically been a positive month for Bitcoin.

Alpha Strategies head Jeff Park pointed out that Bitcoin produced an “amazing” return of 13,656,203% versus +619.5% when held from October to April versus May to September.