September has historically been the worst month by far for bitcoin prices. Prices have declined eight times during the month from 2013 to 2023, according to Coinglass data, with an average loss of 4.8%. In fact, September is the only month where the average performance of bitcoin has been negative, with August being the next worst month with an average gain of 1.8%.
So far in 2024, the trend has borne out, with the price of bitcoin down nearly 7% since the start of September to a little over $54,000.
Bitcoin’s poor performance in September is not unique to the cryptocurrency. In fact, over the past century, September has been the worst month for stock market returns, a phenomenon so well-documented it even has a name — the “September effect.” The reasons for it have been attributed to various events, such as investors returning from their summer vacations and selling assets to lock in gains and/or tax losses.
Others are skeptical however, that any such phenomenon exists, chalking it up to self-fulfilling prophecy, or even just random chance.
But regardless of whether the effect is real or not, September may turn out to be yet another lackluster month for the dominant cryptocurrency, although sentiments around November’s presidential election could act as a wildcard.
“I do think the presidential election will dominate the news agenda and have an impact on the bitcoin price,” said Jonathan Bier, chief investment officer at London-based investment management firm Farside Investors.
Read more: Why You Might Have to Wait a Little Longer for a Crypto Bull Market
“From a narrative and speculation point of view, Trump is certainly more positive for bitcoin, and therefore an improved outlook for a Trump victory could boost the bitcoin price,” he added.
Currently, prediction market Polymarket is reflecting a very slight edge for Trump winning the election (49% versus 48% for Kamala Harris), while the latest traditional polls show Trump trailing Harris in the popular vote by 3.1 percentage points, 47.3% to 44.2%.
But Benjamin Cowen, CEO of crypto analytics firm Into the Cryptoverse pointed out to Unchained that equities tend to underperform in U.S. presidential election years where the incumbent is not running — so-called open-field elections — and that this dynamic could also extend to bitcoin.
“The SPX [S&P 500 Index] sell-off that occurs in September can extend into October during open-field elections because of the uncertainty,” Cowen said.
“Since BTC behaves as a more volatile version of the NDQ [Nasdaq], then BTC could also face headwinds,” he explained.
A Bitcoin Election
Donald Trump’s keynote speech in July at the Bitcoin Conference in Nashville, Tennessee undeniably positioned crypto as a key economic issue in the upcoming presidential election.
“This afternoon, I’m laying out my plan to ensure that the United States will be the crypto capital of the planet and the bitcoin superpower of the world,” Trump proclaimed. He proceeded to propose that the U.S. create a strategic reserve of bitcoin, and also put an end to the alleged plan by the Biden administration to cut off crypto companies from the U.S. banking system, among other things.
At a lengthy speech in New York on Thursday, Trump reiterated his support for crypto in remarks outlining his economic plans for the country, although he did not give any additional details on crypto policies he would implement.
Read more: How to Invest In Crypto Depending on Whether Trump or Harris Becomes President
However, Trump’s speech in July was immediately followed up with an announcement of draft legislation by Wyoming Republican Senator Cynthia Lummis, that if eventually passed, would result in the Federal Reserve purchasing one million bitcoin over five years.
To put that into perspective, all spot bitcoin exchange traded funds (ETFs) in the world combined hold just over one million BTC. If Lummis’ plan is adopted, the United States which already holds more bitcoin than any other country — more than 200,000 BTC — would end up amassing nearly 5% of all bitcoin that will ever be created, second only to Satoshi Nakamoto himself.
“If bitcoin is going to the moon,” Trump said in July. “I want America to be the nation that leads the way.”
Suffice to say, then, that if September provides any strong indication of a Trump victory on November 5th, the price of bitcoin is likely to trend upward.
According to Bier, “the pro-bitcoin election messages from Trump and his attendance at Bitcoin 2024 is enough from a speculator’s point of view” to generate price appreciation.
Conversely, Kamala Harris’s silence on the issue may be a sign that the status quo will continue if she wins the election. After all, she is currently second-in-command of an administration that vetoed pro-crypto legislation and has been widely considered anti-crypto.
Nevertheless, indications of a Harris victory may not necessarily result in a bitcoin price dip. Amanda Wick of Crypto4Harris, an independent pro-crypto organization that backs Harris, told Unchained that her organization wants to “show that not all Democrats are attacking crypto.”
“With productive messaging and more fruitful collaboration, we hope to turn the rest of the Democrats towards a ‘pro-responsible innovation’ policy instead of what’s been happening under Biden,” Wick explained.
Implied Volatility
One way to quantitatively gauge bitcoin price action in September is to review how much volatility has been built into current prices of bitcoin derivative products such as options contracts.
“In uncertain times, we can always look to implied volatility for contextual clues around an asset’s price,” said Mike Butler, options trader with financial network Tasty Live.
“In September we see an implied volatility of 69.5% for a +-$5,872.66 implied price range – about 10% of the current bitcoin futures price.”
Essentially, Butler expects the price of bitcoin to fluctuate up or down within a range of approximately $5,900 in September, meaning its price would be banded between $50,000 and $60,000.
What may be more interesting is that his calculations show increasingly higher implied volatility in October and November, indicating that traders expect wilder price fluctuations around election time.
“In October we see an implied volatility of 69% for a +-$9,307.27 implied price range,” Butler said. “In November, this jumps to 72.5% for a +-$13,854.96 implied price range,” he added.
Macroeconomic Factors
Bitcoin, like any other asset, is not totally immune to government monetary policy. The U.S. Federal Reserve is expected to cut rates on September 18th. This injection of liquidity into the economy will likely boost bitcoin prices.
However, according to reporting from CoinDesk, some experts worry that too steep of a cut — 50 basis points instead of the expected 25 basis points — may signal concerns of a recession from the Fed, which could then see BTC tumble by 20%.
Indeed, worse-than-expected employment data released on Friday morning boosted chances of a significant rate cut in September, and bitcoin has dipped by about 3.6% since the data came out.
This demonstrates the uncertainty of short-term predictions. Arthur Hayes, co-founder of crypto derivatives platform, BitMEX, emphasized that uncertainty in a blog post this week.
“My short-term market predictions are no better than flipping a coin,” Hayes wrote.
