Bitcoin, Cryptocurrency

“The September Effect” – Will an Old Wives Tale haunt us again this year?

  • The September Effect implies that stocks present their worst in September
  • The theory is moderately tenuously upheld by earlier performance
  • Bitcoin’s past performance in Septembers covered by fuels the proposal that it is not exempted

The September Effect isn’t just an old wives’ tale, or rather, it is, but it isn’t one only advocated by old wives.

The theory of The September Effect has it that September is historically the month in which stocks deliver the worst, and it is backed up by statistics on the subject. With Bitcoin being a very diversified market to conventional stores, does it yield to the same September despair? The explanation might startle you.

What is this so-called “September Effect”?

The September Effect has been so-called because, according to traders’ bible The Stock Trader’s Almanac, in normal circumstances, September is the month when the stock market’s three chief indexes, the Dow Jones Industrial Average (DJIA), the S&P 500, and the Nasdaq, habitually achieve the poorest.

This isn’t just a fantasy or rumor – the expression is supported by over a hundred years worth of data, although numerous traders currently consent to it are unknown.

Understandings for The September Effect are still a matter of opinion. Some analysts reckon that the negative effect on markets is due to periodical behavioral preference as investors adjust their portfolios at the end of the season to cash in. Others propose that mutual funds cash in their holdings at this time to cut tax losses.

Is Bitcoin in trouble?

Whatever the cause, The September Effect endures or certainly has to this time. The big mystery for Bitcoin traders, however, is whether the cryptocurrency markets are receptive to the same seasonal impulses. If you’re a follower in unattributed Twitter graphs, the answer is yes:

The above chart implies that Bitcoin does certainly undergo the lowest yields in September, with January and June coming in close behind, although with no source quoted, we can’t be sure of its authenticity.

A rough check of Bitcoin’s last five years of price-performance nevertheless implies that the graph may be correct after all – since 2015, only once in September has Bitcoin completed the month higher than where it started it. In all other years, including during the 2017 bull run, Bitcoin had ended the month of September lower than it started. The September Effect is, it appears, alive and kicking as far as Bitcoin is concerned.

Make those very rough statistics what you will, but it probably isn’t the wisest move to base your trading viewpoint on indefinite patterns dating back to first-world war-era stock markets.

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