Red September - Decrypt
The phenomenon known as "Red September," or “The September Effect,” has haunted markets for nearly a century. The S&P 500 has averaged negative returns in September since 1928, making it the index's only consistently negative month. Bitcoin's track record is worse—it has fallen an average of 3.77% each September since 2013.
The mechanics behind Red September trace back to structural market behaviors that converge each fall. Mutual funds close their fiscal years in September, triggering tax-loss harvesting and portfolio rebalancing that floods markets with sell orders. Summer vacation season ends, bringing traders back to desks where they reassess positions after months of thin liquidity. Bond issuances surge post-Labor Day, pulling capital from equities and risk assets as institutions rotate into fixed income.
This cascade that starts in traditional markets, spills into crypto within days. When the S&P 500 drops, institutional investors dump Bitcoin first to meet margin calls or reduce portfolio risk. Futures markets amplify the damage through liquidation cascades. Social sentiment metrics turn negative by late August and traders sell preemptively to avoid expected losses. Options dealers hedge their exposure by selling spot Bitcoin as volatility rises, adding mechanical pressure regardless of fundamentals.
How it impacts you? Hold on tight to your investments, especially Bitcoin for September. Do your research and put money in what you need to before “Up-tober” where Bitcoin typically sees its historical highs. Especially with the looming Fed Rate cut coming September 16-17, things should shape up nicely for the following month.
Over 90 Crypto ETFs Pending SEC Approval - Decrypt
The SEC is mulling 90 applications for crypto ETFs, many focused on XRP (Ripple) and Solana. The SEC faces a final deadline on at least a dozen applications in October, and experts expect the SEC to approve a number of these applications at that time.
How it impacts you? This lines up with what I aforementioned regarding prices for “Up-tober”. If a lot of these are passed in the October/November time period, you could see an over-whelming injection of liquidity into the markets (you’re going to have to squint to see the Final Deadline dates). Hold tight folks, we got one more month to go.
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