“The rear view mirror is always more clearer than the windshield.”
No one can predict the future with 100% certainty, but we can learn from the past. Looking back at how the markets have performed during previous months and years can give you an idea of what may be in store for the future. Risk management is the one thing you can control while you wait for good opportunities to arise.
In the stock market, the month of September is typically a “bloody month”, or a red month, because of how poorly the stock market performs.
According to the "Stock Trader's Almanac," on average, September is the month when the stock market's three leading indexes usually perform the poorest. This has been termed “The September Effect.”
The September Effect is a market anomaly and not related to any particular market event or news.
What about the cryptocurrency market? Historically, how has Bitcoin performed during the month of September? Will this upcoming September be a red month?
Looking back at the Bitcoin charts, it’s easy to see that Bitcoin tends to see negative returns in the month of September.
As a crypto investor, should you be worried?
Over the last decade, seven out of ten Septembers were red, and the last five years have been red. Interestingly, the average historical negative monthly return for Bitcoin in the month of September is only about 8%.
In retrospect, it seems that the “Red September” for Bitcoin has been made out to be a bigger deal than it really is.
In contrast, the months of April and May have historically been green months. Both were red in 2021 and in 2022.
In the stock market, September is not the worst trading month every year. The same can be said about the cryptocurrency market.
As always, investors and traders should be cautious this month. The Bitcoin Fear and Greed index has settled at “Extreme Fear.”
During the first few days of September we saw that Bitcoin was struggling to regain the $20,000 zone… but the close of the first week it had closed in the green.
During the following week Bitcoin was extremely volatile and had dropped as low as $18,500 but still closed the week strong and above $21,000 on the weekly. The market seemed to be very bullish…
But during this last week the bears completely took over and erased all the gains the bulls had created. Bitcoin reached numbers as high as $22,000 before dropping down to its current level at $19,000…
This past week Bitcoin’s price action behaved just as I had predicted. With the FOMC meeting coming to pass and another increase in interest rates the stock market and cryptocurrency markets took a dip and the $18,000 support was tested. Bitcoin dipped to as low as $18,100! Bitcoin has since recovered and is now sitting around $18,800. This will be the second red week in a row for Bitcoin and the monthly candle is looking to close red.
What’s next for the last week of September? Can Bitcoin recover and and turn this bloody September to a green September? The odds are against Bitcoin… especially with lower lows being printed on the daily. My big picture is that we will see Bitcoin fall to the $15,000-$16,000 range before gradually starting to make its way back up. Bitcoin has been in this falling wedge pattern since November 2021 and we’ll just have to wait and see how it plays out.
If you have the spare funds then this could be a great discount to buy up some Bitcoin for the long term.
Anything can happen. Always expect the unexpected. Stick to your plan. Take profits. Set your stop losses. Don’t get greedy.
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*Disclaimer- I am not a certified financial planner/advisor, certified financial analyst, economist, CPA, accountant, or lawyer, or anything important for that matter. The contents of this article are for informational, educational, and entertainment purposes only and do not constitute financial, accounting, or legal advice. Always do your own research.*
