Key facts:
With an uncertain macroeconomic outlook, a prolonged period of high volatility is expected.
With the US rate cut, the crypto market as a whole is up 10% since the announcement.
Historically, Bitcoin and the broader cryptocurrency market tend to experience a dip in the month of September. This month has typically led to bearish price movements, with Bitcoin and other cryptocurrencies posting consistent negative returns.
However, this September has been unusually active, with increased price activity driven by changes in the macroeconomic outlook and signals from central banks about possible policy adjustments. These factors have created a “perfect storm” of volatility in risk assets, particularly cryptocurrencies. As seen in data over the past decade, September consistently ranks as the worst month to trade Bitcoin.
Bitcoin Seasonality and the Crypto Cycle Theory
Traditionally, Bitcoin and the cryptocurrency market have closely followed the “cycle theory,” particularly aligning with the Bitcoin halving cycle every four years. So how does this cycle relate to the current market performance?
Following the most recent halving event, we have seen months of consolidation, with prices fluctuating in a range and a predominantly bearish market sentiment. This sentiment has directly influenced the current market behavior, keeping prices stable and reflecting the cautious outlook of traders and investors during this phase of the cycle.
Uncertainty in the Macroeconomic Outlook
The macroeconomic outlook is becoming increasingly dynamic, marked by heightened uncertainty surrounding central bank policies, something we have not seen in years. This uncertainty raises critical questions: will we face a recession or will the economy continue to grow?
With central banks navigating challenging economic conditions, the market is anticipating potential policy shifts. This environment, combined with September’s historical tendency for consolidation and lower price movements, sets the stage for an increase in trading volume and volatility.
As we approach key monetary policy decisions, especially with the US election on the horizon, we can expect a prolonged period of elevated volatility in the cryptocurrency market.
Important move by the FED and its decision on interest rates
This month we have already seen the Federal Reserve surprise markets by implementing a 50 basis point rate cut, lowering the interest rate from 5.5% to 5%. This unexpected move has caught the attention of market participants, signaling a change in monetary policy that could have effects on the broader economy and financial markets.
You can see below how, following this rate cut decision, we have already started to see the total crypto market as a whole moving higher. Almost a 10% increase since the announcement.
Bitcoin Price Action During This Period Of Uncertainty
Despite September’s reputation as a historically weak month for Bitcoin, there are already signs of a potential breakout to the upside by the end of the month. Current price movements suggest a shift in market sentiment, hinting at the possibility of continued upward momentum. This outlook aligns with Bitcoin’s halving cycle, which tends to precede bullish phases.
Many experts believe that we are approaching this critical phase, with favorable market conditions and long-term cyclical trends likely to drive an increase in the price of Bitcoin in the near future.
Other notable moves in the cryptocurrency space
Following the release of risk-friendly monetary policy data, some interesting trends have emerged in the altcoin market. Solana, in particular, appears to be leading the way, displaying the most volume and momentum. Its price is up nearly 25% on the month, defying the belief that September is typically an underperforming month for cryptocurrencies.
This rally suggests that market dynamics may be changing, with certain altcoins bucking traditional patterns and benefiting from improved economic conditions.
There have been other notable moves, particularly from Ethereum (ETH). Despite the recent launch of the ETH ETF, there has been a somewhat delayed response in terms of increased volume and volatility on the pair, unlike the immediate surge seen after the launch of the Bitcoin ETF.
However, Ethereum appears to be recovering, with its price now trading above $2,500 and showing signs of further gains in the near term. It will be interesting to see if the ETH ETF ultimately has a positive impact on the price as market conditions evolve.
How to capitalize on upcoming economic events
As the macroeconomic landscape evolves and uncertainty around policy adjustments and macroeconomic conditions grows, new opportunities arise for traders in Argentina. PrimeXBT, a leading Crypto and CFD broker, provides an all-in-one trading platform designed to meet the diverse needs of traders.
At PrimeXBT, you can trade various price movements across multiple markets, including Crypto Futures and CFDs on cryptocurrencies, foreign currencies, indices, and commodities. It also offers the ability to buy and trade crypto as well as fiat. With the lowest fees in the industry, powerful trading tools, and a wide selection of asset classes, PrimeXBT offers the features you need to make the most of these economic opportunities.
Operate economic events with PrimeXBT
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