- September is historically the worst month for Bitcoin, with an average decline of 4.5%
- Factors like risk asset volatility and SEC enforcement actions contribute to the “crypto September decline”
- Despite the September dip, October and November tend to bring stronger market performance
September has generally been a no-good month for Bitcoin. Since the cryptocurrency started trading in 2010, Bitcoin has averaged a 4.5% decline during September—the worst-performing month of the year.
During nine of 13 Septembers, Bitcoin has traded down. Its worst September was in 2011 when Bitcoin fell by 41.2%. In the first week of September 2024, Bitcoin is down 7%.
Theories Behind the September Effect
- Risk Asset Decline: Historically, September is tough for all risk assets, not just Bitcoin. Stocks, particularly those in the Nasdaq-100, tend to perform poorly in this month due to post-summer volatility and mutual fund tax strategies that contribute to such a decline.
- SEC Enforcement Season: The fiscal year closes in September, and as such, there is often a rush of enforcement cases against crypto firms. This year, big players such as Galois Capital and OpenSea have already faced enforcement action—a factor adding to negative market sentiment.
- Reflexivity: Investors now expect September to be bad, so it becomes self-fulfilling. Conversely, Bitcoin tends to rally during October and November. In fact, October has been so strong that it’s been called “Uptober” in the crypto community, owing to its average 30% gain during that time of the year.
2024 Factors
This year, added uncertainty around the U.S. presidential election and potential Federal Reserve rate cuts add to the overall pressure. Despite outflows from Bitcoin and Ethereum ETFs, their adoption by advisors is at a record pace—a signal of long-term confidence.
Conclusion
Although September has been difficult, history suggests it may be followed by an October/November rally once market uncertainties dissipate. Since the exact reason behind the September Effect cannot fully be explained, investors can only hope that history serves as a guide for a more favorable market ahead.
