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Bitcoin (BTC) is on the verge of experiencing its most remarkable September in the past ten years, with prices soaring past $65,000. This unusual price surge can be attributed to a few pivotal factors.
Reasons Behind Bitcoin’s Impressive September Gains
Historically, September has been Bitcoin’s most challenging month in terms of price performance. However, the leading cryptocurrency is now set to achieve its best September in at least a decade, thanks to several macroeconomic developments.
Monetary Policies and Their Impact
On September 18, the US Federal Reserve (Fed) commenced its interest rate cut cycle for the first time in four years, reducing rates by 50 basis points (bps) in response to decelerating inflation and increasing unemployment. This rate cut had an immediate effect on risk-on assets, including BTC, which has appreciated by over 10% since the cut. In contrast, Bitcoin’s average price decline in September over the past decade has been 3.45%, according to CoinGlass data.
Following the Fed’s decision, the European Central Bank (ECB) and the People’s Bank of China (PBoC) also lowered borrowing costs to stimulate their respective economies, further propelling BTC’s price towards its previous highs.
The Impact of Bitcoin Halving
Bitcoin halving is another significant factor potentially influencing the digital asset’s price action. The most recent halving occurred in April of this year, reducing block confirmation rewards for miners from 6.25 BTC to 3.125 BTC. Historical data indicates that halving events typically act as a bullish trigger for Bitcoin due to the resulting supply scarcity. For example, following the May 2020 halving, BTC’s price surged from approximately $8,900 to over $64,000 by April 2021, marking an 8x increase in less than a year.
Rising Interest in Bitcoin ETFs
Additionally, US spot Bitcoin exchange-traded funds (ETFs) continue to attract growing interest from both retail and institutional investors. On September 26, these ETFs recorded $365.57 million in total net daily inflows, the largest since late July. Since their inception, the cumulative net inflow for Bitcoin ETFs now totals $18.31 billion.
Cautious Optimism Key To Riding The BTC Wave
While BTC seems to have overcome its typical September slump, it is important to note that the leading digital asset still needs to breach certain critical price levels to achieve a new all-time high (ATH).
Technical Indicators and Resistance Levels
As previously reported, Bitcoin’s relative strength index (RSI) fell below 80 on the monthly chart, indicating that the cryptocurrency’s bullish momentum might fade after an enthusiastic buying spree. Additionally, a recent report by crypto exchange Bitfinex highlighted that despite Bitcoin’s recent upward movement, it must decisively surpass a strong resistance level of $65,200 to maintain its positive momentum. The good news for bulls is that BTC is holding steady at $65,674, up 2% in the last 24 hours.
Final Thoughts
In conclusion, Bitcoin appears to be on track for an unprecedented September performance, driven by favorable macroeconomic policies, the impact of recent halving, and growing interest in Bitcoin ETFs. However, cautious optimism remains essential as the cryptocurrency navigates critical resistance levels to sustain its upward trajectory.
