Bitcoin below $110,000, September gains in crypto vanished

The crypto market has officially entered negative territory for September, despite Bitcoin maintaining a slight increase, following a brutal week that wiped out $162 billion in value. The decline has erased gains made during a two-week rise at the beginning of the month, when Bitcoin briefly recorded its second-best September performance in 13 years.

However, it seems that the seasonal curse does not affect traditional markets, despite September historically being the worst month of the year for Wall Street. S&P 500 has risen 2.15 percent over the past month, while gold has increased by 10.58 percent during the same period. However, this risk appetite does not currently seem to apply to cryptocurrencies.

The crypto market has fallen nearly 10 percent over the past month to $3.84 trillion, and discussions about September’s notorious weakness of digital assets, known as ‘red September’, have been revived.

Red September

Historically, September has delivered negative returns for crypto markets in 8 of the last 11 years, a phenomenon that traders attribute to the rebalancing of institutional portfolios after the summer holidays and adjustments at the end of the fiscal year.

This year’s pattern appears to follow the scenario despite early buying that pushed the total market capitalization above $4 trillion with trading volume increasing by 27 percent in the first days of September. Profit-taking in the middle of the month could lead to an increased impact on the monthly net loss.

The mechanics of the current sell-off reveal how financial leverage has amplified the damage. When Ethereum fell below the psychologically important level of $4,000, marking the first breach since August, it triggered long liquidations of $500 million on that asset alone. The contagion immediately spread to smaller tokens that are more prone to volatility.

Altcoin Season Index, which measures the rotation of capital between Bitcoin and alternative cryptocurrencies, sharply fell during the week from 77 to 69 points as investors retreated to the perceived safety of the largest cryptocurrency, Bitcoin. In other words, traders are shedding their tokens, some of them rotating into Bitcoin, as nervousness intensifies.

Regarding this, the way the Altcoin Season Index is structured, it does not matter whether traders are swapping altcoins for Bitcoin or completely leaving the market; Bitcoin’s dominance increases in both scenarios.

The good news for bulls is that September will be over in five days. The bad news is that October, colloquially referred to as ‘uptober’, is also not a guarantee.