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Bitcoin experiences decline in September, yet year-end rally prospects improve, according to Bitwise CIO.
Bitwise Chief Investment Officer Matt Hougan warned investors that persistent market unpredictability is causing considerable volatility in Bitcoin and other cryptocurrencies, yet he conveyed hope for a rebound later in the year.
In his most recent investor communication, Hougan emphasized significant challenges, such as the forthcoming US presidential election and ongoing discussions regarding Federal Reserve rate adjustments, as key elements affecting the current decline.
As stated by Hougan:
“Markets dislike uncertainty, and at present, there’s an abundance of it.”
He noted that with no definitive guidance on US leadership and monetary policy, Bitcoin has already decreased by 7% in the initial week of September, contributing to a historical trend of weak performance during this month.
The “September Effect”
According to Hougan, Bitcoin’s difficulties in September are not unprecedented, as he referenced the cryptocurrency’s average decline of 4.5% during this month since 2010.
Historically, Bitcoin has recorded losses in nine of the last 13 Septembers, with 2011 representing its most significant downturn — a drop of 41.2%. Hougan recognized that this trend is continuing, with this year already witnessing notable losses.
He remarked:
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“The September Effect is genuine, and Bitcoin has endured it repeatedly.”
He identified several potential reasons for this phenomenon, including broader declines in risk assets, with the Nasdaq-100 down nearly 6% thus far this month.
Moreover, intensified SEC enforcement actions often peak in September, adding further pressure to the cryptocurrency market. Recent developments, including settlements and lawsuits against crypto entities like Galois Capital and OpenSea, have contributed to the prevailing uncertainty.
Potential rebound
In spite of the current challenges, Hougan expressed assurance that Bitcoin and other digital assets could experience a robust recovery in the concluding months of the year.
Historically, October and November have been among the most favorable months for Bitcoin investors, with October earning the moniker “Uptober” due to its average increase of 30%. Hougan believes that as the uncertainty surrounding the U.S. election and Federal Reserve policy diminishes, the market will stabilize.
He added:
“My base case remains that we see a significant rally as uncertainty starts to dissipate in October and November.”
He highlighted that while ETF inflows into Bitcoin and Ethereum have recently slowed, the broader acceptance of Bitcoin ETFs by investment advisors has continued at an unprecedented rate, indicating long-term confidence in the asset class.
The post Bitcoin faces September slump but optimism grows for year-end rally – Bitwise CIO appeared first on CryptoSlate.
