Bitfinex analysts warn of 20% drop following potential Fed rate cut, complicating September outlook.
Key Takeaways
- Bitcoin historically faces volatility in September, with an average 7% drawdown.
- Potential Fed rate cut adds complexity to Bitcoin's September performance forecast.
September is a traditionally volatile month for Bitcoin (BTC) that usually results in monthly losses, according to analysts. The projection is that BTC could fall to $55,000 if the average loss is seen this month.
The trader identified as Rekt Capital shared on X that a single-digit downside for Bitcoin in September happens 54% of the time, while a single-digit upside happens 27% of the time.
Notably, Bitfinex analysts added that the average return is 4.78%, and a typical peak-to-trough decline is 24.6%. This volatility, they explained to Crypto Briefing, is caused by the end of the “summer trading lull,” as fund managers return from vacation and human-driven trading activity increases.
Despite the peak-to-trough decline being 24.6%, Rekt Capital highlights that BTC’s average recurring drawdown in September is 7%. “That would mean Bitcoin would drop into ~$55,000 again,” he added.
Extreme landscape
However, Bitfinex analysts consider another layer of complexity to September’s dynamics this year, which is an interest rate cut by the Fed. This could potentially exacerbate market volatility.
“This historical price action for September also aligns with our view of a projected 20 percent drop in Bitcoin prices following a rate cut,” shared the analysts.
If this scenario happens, then Bitcoin could go as low as $45,000 in September. However, on the latest edition of the “Bitfinex Alpha” report, the exchange analysts underscored that this is not an arbitrary number, as they are speculating over evolving macroeconomic conditions.
Glimmers of hope
Bitfinex analysts also added that when August ends in the red, September has occasionally defied expectations and delivered positive returns.
“This could provide a counterargument to the assumption that September will necessarily be a bearish month for Bitcoin,” they added.
Moreover, Rekt Capital shone a light of hope to his followers in case Bitcoin really ends up correcting this month by saying that October usually produces a double-digit upside of 22%.
