- Abysmal August for cryptocurrencies could pave way for historically terrible September, with Bitcoin historically falling around 9% in the month, according to data going back to 2017.
- Possibility that the Merge for Ethereum, a key software upgrade, and due to be completed this month, could help to dampen some of the downside volatility for cryptocurrencies.
It’s a cruel, (cruel) cruel summer,
Leaving me here on my own
It’s a cruel, (cruel) cruel summer,
Now you’re gone
– Cruel Summer by Bananarama off the album Bananarama. Copyright 1983.
After a brief rebound in July, cryptocurrency markets, along with other assets, were hammered in August against the backdrop of tighter central bank monetary policy.
But even if the U.S. Federal Reserve spins a less hawkish tone at its upcoming policy meeting this month, history is not on the side of cryptocurrencies as September has typically seen the asset class tumble.
Every September since 2017, Bitcoin has averaged a 9% drop for the month over the past five years, according to Bespoke Investment Group, and this has tended to weigh down other cryptocurrencies as well, including Ether, which has typically seen double digit dumps in the same month.
Cryptocurrencies have had a terrible year so far, as central banks globally tighten monetary conditions to fight inflation and with growing geopolitical and economic uncertainty.
Cryptocurrencies and stocks have also resumed their reliable correlation, especially with U.S. tech stocks, represented by the Nasdaq 100.
September has also typically been a rough month for equities as well, as traders return to the office from summer holidays, increasing volumes and adding to volatility.
Ether has remained somewhat resilient because of optimism over the impending Merge, an upgrade of the Ethereum blockchain software to the far more energy-efficient Proof-of-Stake.
The recent outperformance of Ether relative to other cryptocurrencies has seen Bitcoin’s dominance of the total market cap of digital assets wane.
