Bitcoin has been going through a difficult time since the middle of August, when prices dropped suddenly and drastically, eliminating the gains recorded since the beginning of summer. Many investors choose to switch their strategy to only hodling as a means to stave off the losses. To buy Bitcoin and hold it for longer, letting it accumulate value, seems like the best plan to have at the moment, and many have started doing this. After news broke out that short-term holders incurred massive losses, the advantages of hodling became even more apparent.
But where is the marketplace headed going into September, and what can investors expect to see in terms of price points toward the end of the year?
Past performance
Historically, September isn’t the greatest time for crypto. BTC typically records negative performance, with a mean decline of almost 6%. An exception would be the years following halving events. In 2013, 2017 and 2021, prices continued to grow and evolve. However, 2023 isn’t such a year, as the next halving is expected in 2024. And, if Bitcoin isn’t doing well, then it’s inevitable that other cryptocurrencies won’t have an easy time either.
The September Effect doesn’t only apply to digital money, as the stock market is also impacted. In fact, research has often shown that September presents the worst average performance throughout the whole year. This has been observed for about a century so far. However, some economists believe that the September Effect is either negligible or never existed in the first place. Moreover, the traders who are aware of these conditions should know how to act to make it practically disappear.
However, since cryptocurrencies are relatively new in the financial world, things will likely be different for them. When it comes to crypto, the September Effect is pure market psychology. Many investors are likely to follow the bear market, which leads to them selling their stocks. This results in an almost immediate price slide.
September 2023
However, historical trends also do not necessarily indicate what will happen this year. Crypto prices remain changeable, and even in the case of well-known and firmly established players such as Bitcoin, known for reliability and relative stability compared to the altcoins, things aren’t crystal clear. Many different factors influence the manner in which the market moves forward.
However, on August 31st, crypto markets recorded a new fall, deepening the worries about the upcoming month. After the promising start at the beginning of the year and the uncertain events towards the middle, the fourth quarter of 2023 doesn’t seem to bring a respite, and things unfortunately don’t look promising. It appears that it will still take longer for the market to develop.
Both Bitcoin and altcoins were affected due to the release of important inflation data. US stock futures climbed high, and investors remain focused on the next move of the Federal Reserve. Whether or not there will be another increase in interest rates in September and when the Central Bank is likely to start cutting rates are the chief questions in everyone’s minds. A “soft landing” would be the preferable solution, as it implies that inflation can be controlled without the threat of an economic slowdown. Comparatively, a “hard landing” refers to a situation in which the economy would be considerably impacted.
The Q4 appears to align with historical trends, showing that the Bitcoin marketplace is due for a tough time. It’s quite challenging to make definitive choices at the moment, as things are still falling in line, and investors are still looking at how the more significant economic structures will affect cryptocurrencies.
Price sinking
On August 28th, data showed a weakened Bitcoin that went downhill to $25,800 before finally consolidating. However, the difference in values wasn’t anything noteworthy. Market participants saw that August produced cumulative losses of 11% and that volatility remains a problem. Some investors are looking for a movement that will take BTC to $25,000 so that users can reclaim the higher positions and continue their ascension upwards.
The fact that Bitcoin has been underperforming this month should come as no surprise. Even when judging by historical standards, the outlook has been rather bleak. However, according to data, it is possible that August 2023 was one of the worst in Bitcoin’s entire history, rivaling August 2015. In 2022, the price fell by 13.9%, which marked the beginning of one of the worst bear markets the ecosystem had ever seen.
On August 29th, Bitcoin received some gains from a US court ruling, preventing it from falling even lower. A crypto asset manager won against the SEC ruling that denied its proposal. A federal court declared that the denial was arbitrary, with the landmark victory seen as a win that could pave the way for the introduction of brand-new functionality for digital assets. The news caused Bitcoin to recover by roughly 7%, cutting down some of the heavy losses that have been growing over the past weeks.
Bear market
Although it seemed for a while that the bulls would be back on track, it now appears that that has been little more than wishful thinking or a momentary break. The bear market is still in full swing, leading analysts to claim that it is the longest of its kind ever recorded in crypto history. The situation is somewhat comparable to what happened in 2015. And while there’s still fundamental growth, many investors are slowly losing their faith in crypto.
The current bear market has been going on for almost 500 days, and while the price fall isn’t as bad as what November and December 2022 had to bring, it is still faring quite poorly. Even positive news events, while helpful, haven’t managed to obtain a considerably beneficial response. That shows that the better news hasn’t entered the market consciousness yet. All these cumulated events are reflected in the price points, as the bear market has become very strong.
Therefore, although the crypto environment isn’t what investors had hoped, it’s important to remember that BTC is still a resilient asset, meaning that it can still greatly help your portfolio. You just have to be careful with the strategy you choose.
