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Bitcoin (BTC) looks poised to record its best September in a decade, surpassing $65,000 last year. This unusual price appreciation can be attributed to several important factors.
The Reasons Behind Bitcoin’s Impressive September Gains
Historically, September has been the worst month for BTC in terms of price performance. However, the apex cryptocurrency is now on track to post its best September in at least a decade, driven by macroeconomic developments.
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On September 18, the US Federal Reserve (Fed) began its cycle of interest rate cuts for the first time in four years, cutting rates by 50 basis points (bps) due to falling inflation and rising unemployment.
The rate cut immediately impacted risk assets, including BTC, which has appreciated more than 10% since the cut. In comparison, the average drop in Bitcoin’s price in September over the past decade has been 3.45%, according to the chart below from CoinGlass.
According to the decision of the Fed, the European Central Bank (ECB) and the People’s Bank of China (PBoC) reduced the cost of borrowing to improve their economy. This pushed the price of BTC to its previous high.
The Bitcoin halving is another major factor that may now be starting to show its effect on the digital asset’s price action. Bitcoin started halving earlier this year in April, reducing the block confirmation rewards for miners from 6.25 BTC to 3.125 BTC.
Previous data shows that the halving has been caused by Bitcoin due to a shortage of supplies. For example, in May 2020, the price of BTC rose from around $8,900 before the halving to over $64,000 in April 2021 – an 8x price increase in less than a year.
Meanwhile, US spot Bitcoin exchange-traded funds (ETFs) continue to witness growing interest from retail and institutional investors alike, as they recorded $365.57 million in total daily inflows on September 26, the largest since late July. Since its launch, the cumulative revenue of Bitcoin ETFs now stands at $18.31 billion.
Anticipation Key to Riding the BTC Wave
Although BTC seems to be shaking off its usual September decline, it is worth highlighting that the leading digital asset still needs some wins. it is important price levels before reaching an all-time-high (ATH).
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As previously reported, the Bitcoin strength index (RSI) he fell below 80 on the monthly chart, indicating that the cryptocurrency’s bullish momentum may be ending after the bullish buying.
In addition, a recent report by crypto exchange Bitfinex noted that despite Bitcoin’s recent upward movement, it must firmly overcome the strong resistance level of $65,200 to continue its positive momentum. The good news for the bulls is that BTC is holding firm at $65,674, up 2% in the last 24 hours.
Featured image from Unsplash, Charts from CoinGlass.com and Tradingview.com