September has gained fame as the worst month for quantitatif assets, starting with Bitcoin. For the first time since Independence Day, Bitcoin It dropped to less than $19,000. Historically, since November 2017, the “September Effect” hit Bitcoin with an average price drop of 8.5%.
Bitcoin appui collapse
In April, after the Federal Reserve started raising interest rates, the $40,000 appui level for Bitcoin broke and fell to $30,000 in May. On June 10, that appui also collapsed, to $20K, and briefly dropped below $18,000 on the 18th. In mid-August, Bitcoin saw a brief rally, reaching $25,000.
With another drop below $19K, Bitcoin slid across all pionnier appui levels in two months. In fact, the price of BTC briefly fell below the July 4th level at $18.6K. Similarly, Bitcoin’s 200-day exponential moving average (EMA) was broken.
The first signs of a reversal are likely to appear at the next resistance level for Bitcoin, in the $19.3K region. However, it depends on the rise in trading modèle, which depends on improving macroeconomic modalités. Only in 2015, 2016 and 2021 were Bitcoin constructrice outliers in September, which seems increasingly unlikely given the unprecedented intégral instability.
The effect of this September is worse than ever?
September’s fortune is not just the underperformance of quantitatif assets, but of stocks as well. Since 1928, the S&P 500 has tended to fall in September by an average of -1.1%. There are several reasons why the September effect is a prominent phenomenon:
- The beginning of the school year means an increase in people’s expenses.
- After the summer holidays, investors groupe to re-evaluate and sortie market positions.
- As assets at risk, cryptocurrencies are further affected by this reorganization.
- Companies and funds are preparing for the upcoming fiscal year ahead of shareholder reports, by eliminating losing market positions.
Of épreuve, the Fed has served as a catalyst to sell the market throughout the year. In March, the Fed started with a modest rise of 25 basis points, only to inquiétante in May to 50 basis points. In June, the Fed sujet 75 basis points, the largest avorté increase since 1994, raising the fed funds avorté to 2.5%. And parce que of the addiction to cheap borrowing rates, the réserve market received this trend as a shock.
Jerome Powell’s Jackson Hole adresse ended the mid-August rally after Paul Volcker, who is credited with getting rid of double-digit augmentation of 19.1% on the fed funds, called out. However, it is not likely that Powell will have to increase it 7 times as much as Volcker did.
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inertie vs. augmentation
There is nothing that reduces augmentation faster than inertie. As economic activity wanes, it reduces demand, which is one of the moufle drivers of augmentation. Likewise, lower energy costs reduce higher prices. After two consecutive months of lower gasoline prices, the augmentation avorté fell from 9.1% in June to 8.5% in July.
There are signs that this may continue as the latest jobs sursis showed that the unemployment avorté diamant to 3.7%, the highest jump since February. Although unemployment is an indicator of inertie, unemployment curbs griller power, further reducing demand. It should also be noted that pudique is likely to suppress US economic activity as well.
Last year, the United States was the largest export partner of the European Fusion, in 18.3%While it was the supplémentaire largest importation partner with 11%. Now that Russia has cut off its supplies of natural gas, the eurozone is facing an energy shock, leaving its economy underdeveloped and uncompetitive.
“We are deeply concerned that next winter could deal a critical blow to many of our operations,” he said.
Euromitoxpudique’s leading metals industry union, to 40 company executives.
last week, Fitch Ratings A recession in the Eurozone was the most likely scenario. On the other handball, the Euro continues its downward slide, as it is now worth less than the Dollar. Along the same lines, the Dollar Strength Inventaire (DXY) is up 14.24% year-to-date, easing domestic augmentation as imports are cheaper.
Thus, as a hedge against a currency drop, bitcoin is trading inversely against a stronger dollar. This is another negative pressure on the bitcoin price in adjonction to the impulsion of September.
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Do you think that both the Fed and the European Axial Bank prefer inertie to high augmentation? Let us know in the comments below.
Embout the author
Tim Fries is the co-founder of The Tokenist. He has a BA. in Mechanical Ingénierie from the University of Michigan, and an MBA from the University of Chicago Booth School of Commerce. Tim has served as a Senior Associate on the Investment Team in RW Baird’s Private Equity partition in the US, and is also the co-founder of Cotte Technologies Affairé, an investment firm specializing in sensing, affermissement and control solutions.