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By Matthew Hayward, Senior Market Analyst at PrimeXBT

September has traditionally been a difficult month for Bitcoin and the wider cryptocurrency market, often linked to falling prices. However, for only the fourth time in Bitcoin's trading history, this September may end on a positive note. If we closely examine the price movements following a positive September, we notice that Q4 has historically seen strong volatility and significant price action. For example, last year, after a positive September, Bitcoin experienced three consecutive months of gains, resulting in a nearly 50% cumulative return. With the current global economic conditions intensifying, could we see a similar pattern as we approach the end of 2024?

The seasonal patterns of Bitcoin and the theory behind cryptocurrency market cycles

Bitcoin and the wider cryptocurrency market have historically adhered to the "cycle theory," with a strong connection to Bitcoin's four-year halving cycle. But how does this pattern influence the current market dynamics? Since the latest halving event, the market has experienced an extended period of consolidation, marked by price fluctuations within a narrow range and a predominantly bearish sentiment. This prevailing trend has had a direct impact on market activity, stabilising prices as traders and investors maintain a cautious stance during this particular stage of the cycle.

In the illustration above, you can see that the current price action is positioned within the "re-accumulation" phase. This phase typically follows a significant upward expansion, and in this instance, it's evident that last year's price action surged rapidly to reach all-time highs ahead of the halving event. Remarkably, this marks the first time in Bitcoin's history that we've observed such a performance, with prices reaching new ATH’s levels before the halving event commenced.

Looking back at Bitcoin’s previous 4-year cycle, we can see that it initially experienced a relatively modest upward move, followed by a challenging and prolonged drawdown period before the halving event. However, everything shifted after the halving. This is when Bitcoin surged to new all-time highs, and we saw the “expansion move” occur.  Within these 4-year cycles, Bitcoin typically goes through a period of decline “Bear market”, which is followed by an accumulation phase where traders and investors build their positions. After that, there is usually a pre-halving expansion, followed by a reaccumulation phase, and finally, a strong expansion post-halving “Bull Market”. 

Uncertainty in the broader economic environment

The macroeconomic landscape is becoming increasingly fluid, marked by rising uncertainty around central bank policy decisions and the labour market, particularly in the U.S. Historically, September has been a month of consolidation and subdued price activity. In this context, the likelihood of higher trading volume and increased volatility grows. As we approach key monetary policy decisions, jobs data releases, and the upcoming U.S. elections, the cryptocurrency market is set for a prolonged period of heightened volatility. A critical indicator to monitor will be the U.S. job market, with special attention to the Non-Farm Payroll data released monthly.

Significant shift from the FED regarding their interest rate decision

This month, the Federal Reserve surprised market participants by enacting a 50 basis point rate cut, reducing the interest rate from 5.5% to 5%. This unexpected action has raised concerns and indicates a significant shift in monetary policy that may impact the wider economy and financial markets. As shown below, following this decision to cut rates, we have begun to see a noticeable upward movement in the total cryptocurrency market. This surge reflects how quickly market sentiment can change in response to central bank actions.

TOTAL CRYPTOCURRENCY MARKET CAP:

Recent price movements suggest a shift in market sentiment, indicating the potential for sustained upward momentum. This viewpoint aligns with Bitcoin’s halving cycle, which typically aligns in bullish phases. Many experts believe we are approaching this critical “Expansion” phase. The pressing questions are whether we can break out of this trading range and how the broader macroeconomic environment will influence price action in the future.

BITCOIN (BTC/USD):

How to capitalise on September’s seasonality with PrimeXBT

As these cycle theories play out, and the macro landscape heats up, potential trading opportunities can emerge. PrimeXBT is a leading Crypto and CFD broker, that offers an all-in-one trading platform to buy, sell and store Cryptocurrencies, and trade over 100 popular markets, including Crypto Futures, Copy Trading and CFDs on Crypto, Forex, Indices, and Commodities using both fiat or Crypto funds.

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Disclaimer: The content provided here is for informational purposes only and is not intended as personal investment advice. Past performance is not a reliable indicator of future results. The financial products offered by the Company are complex and come with a high risk of losing money rapidly due to leverage. Virtual assets are inherently volatile and subject to significant value fluctuations, which could result in substantial gains or losses. These products may not be suitable for all investors. Before engaging, you should consider whether you understand how these leveraged products work and whether you can afford the high risk of losing your money. PrimeXBT does not accept clients from Restricted Jurisdictions as indicated in its website.