Seasonally Soft September
September is a statistically soft month, not only for Bitcoin, but for most risk assets. Today we're going to investigate the BTC demand profile to see whether we can buck this soft-September trend.
G’day Folks,
Bitcoin continues to trade in a somewhat heavy manner, with the price selling off as far as $110k on Sunday, retesting the previous all-time-high break-out. We had a short term rally back up to $117k after Jerome Powell’s somewhat dovish speech at Jackson Hole, but the market has given it all back.
There’s no question, that the bulls just haven’t been able to establish much upside momentum in recent weeks.
Generally speaking, whenever I have seen the market trade in this manner, where short-term rallies are quickly faded, it is often a signal that the correction hasn’t run out of sellers just yet.
As Bitcoin becomes an asset which is increasingly traded by institutional investors, we can expect market seasonality to play an increasingly relevant role in how it trades. If we look at the average monthly performance for the S&P500, late-August and September clearly emerge as one of the weakest periods of the year.
Since the 2022 bear market, the long-term correlation between Bitcoin, equities and gold have all been consistently higher than usual. In my eyes, this is a reflection of the idea that it is all one trade, where assets are being used as a tool to hedge fiat currency debasement risk.
If it is all one trade, and September is a historically weak month…perhaps September is going to be a weak month!?
In today’s report, I’m going to explore a variety of factors which I think are weighing on the Bitcoin price, ranging from:
The behaviour of Short-Term Holders.
Demand coming from from ETFs and Treasury Companies (or a lack thereof).
A read on how the options market is pricing in current downside risk.
The idea will be to make a read on whether a soft September is likely to play out, or if there is evidence we may buck the historical trend.
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