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bitcoin (btc) looks poised for its best September in a decade, surpassing $65,000. This unusual price appreciation could be attributed to several key factors.
Reasons behind bitcoin's impressive gains in September
Historically, September has consistently been the worst month for btc in terms of price performance. However, the leading cryptocurrency is now on track to record its best September in at least a decade, boosted by several macroeconomic developments.
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On September 18, the US Federal Reserve (Fed) began its interest rate cutting cycle for the first time in four years, cutting rates by 50 basis points (bps) in response to slowing inflation and the increase in unemployment.
The rate cut immediately affected risk assets, including btc, which has appreciated over 10% since the cut. By comparison, the average bitcoin price drop in September over the last decade has been 3.45%, according to the CoinGlass chart below.
According to the Federal Reserve's decision, the European Central Bank (ECB) and the People's Bank of China (PBoC) reduced borrowing costs to stimulate their respective economies. This further propelled the btc price towards its previous highs.
The bitcoin halving is another key factor that could now be starting to show its effect on the digital asset's price action. bitcoin halved earlier this year in April, reducing block confirmation rewards for miners from 6.25 btc to 3.125 btc.
Previous data indicates that the halving has generally been a bullish trigger for bitcoin due to the resulting supply shortage. For example, in May 2020, the price of btc bitcoin-halving-countdown” target=”_blank” rel=”nofollow”>pink from about $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 daily net inflows totals on September 26, the highest since late July. Since its launch, the cumulative net inflow of bitcoin ETFs now stands at $18.31 billion.
Cautious optimism is key to riding the btc wave
While btc appears to have recovered from its typical September drop, it is worth noting that the leading digital asset still needs to overcome certain important price levels before reaching a new all-time high (ATH).
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As previously reported, bitcoin's Relative Strength Index (RSI) fell below 80 on the monthly chart, indicating that the cryptocurrency's bullish momentum could fade after an enthusiastic buying spree.
Furthermore, a recent report by cryptocurrency exchange Bitfinex noted that despite bitcoin's recent upward move, it must decisively overcome a strong resistance level of $65,200 to continue its positive momentum. The good news for bulls is that btc is holding steady at $65,674, up 2% over the last 24 hours.
Featured image from Unsplash, charts from CoinGlass.com and Tradingview.com
