Why September is considered a bad month for cryptocurrencies
Cryptocurrencies have their second sale in September. As the Evergrande crisis in China raised fears of a massive asset selloff globally, Bitcoin hit a 24-hour low to $ 40,267 before rising slightly to close at just over $ 43,000. for 1 BTC. But Bitcoin wasn’t the only cryptocurrency to experience a decline for the second time this month. Ether, XRP, and Cardano are all down over a week and a month.
This isn’t the first time cryptocurrency, and Bitcoin in particular, has been in the red in September. The September bearish market for crypto has been observed for the past four years.
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Something about September?
However, the phenomenon is not isolated to cryptocurrency assets. The stock market has historically recorded the worst performance in September. U.S. stock indices, which track the performance of the stock market by tracking the stock prices of some of the largest U.S. companies, such as the Dow Jones Industrial Average (DJIA), S&P 500, and NASDAQ, have the worst in September . The effect is sufficiently well recorded where it has been called the September effect.
While many have theorized about the causes of the September effect, there is no consensus on the causes of the effect. It was observed that the effect wore off in recent years, and in some years the stock markets even managed to grow in September contrary to the beliefs of a constant bear market.
Most think the September effect is a prime example of market psychology, where enough investors believe in the idea of a bear market during the month and thus sell their stocks. This sell-off results in a fall in prices which further reinforces the idea of the September effect.
The Bitcoin affair
Likewise, in the case of cryptocurrencies like Bitcoin, there is no particular reason why September was a “bad” month. For September 2021 in particular, the cryptocurrency market has been in a volatile state since the start of the year, and even slight changes in the global situation have produced significant effects on cryptocurrency prices.
While many investors and crypto enthusiasts swear by the effect, the likely explanation for the past five years of poor performance during the month is just a random chance that many people are trying to fit into. a false diagram.
(Edited by : Shoma bhattacharjee)
First publication: STI