Bitcoin Crash Possibilities: Identified by Two Key Factors
In the world of cryptocurrencies, September has often proven to be a significant month. Here's a roundup of some key events and trends that have shaped the crypto market in recent years.
Last year, China's central bank and top agencies declared all crypto transactions illegal, causing a 9% drop in Bitcoin's price. However, the market showed a minor pullback soon after. Fast forward to 2025, September is expected to be red despite more positive regulation due to short-term weakness in the DAX and potential ongoing economic challenges.
Looking back at 2024, the Federal Reserve's decision to cut rates by 50 basis points on September 18 created favorable financial conditions for Bitcoin. The April halving of that year reduced new issuance, leading to less sell pressure and a quick market response to any shift in demand.
Portfolio managers often rebalance their holdings in September for year-end reports, adding selling pressure to the Bitcoin market. This trend was seen in 2023 and 2024, with Bitcoin showing a 3.9% and 7.29% decrease, respectively.
However, not all is bearish for Bitcoin. Bulls are expecting a "Green September" in 2025, predicting a bullish trend continuation due to favorable regulations. This optimism is also reflected in the U.S. spot Bitcoin ETFs approval, which brought large cumulative inflows through 2024, keeping demand higher.
The price of Ethereum has been bullish since it broke above the $4,000 resistance. There's also a rotation of liquidity from Bitcoin to Ethereum expected, potentially causing volatility to fade out and day traders to shift to more volatile assets.
It's important to note that liquidity can be thinner late in the month, with small dips triggering stop losses. CoinGlass reports the prediction of Bitcoin price drops based on current long positions on exchanges, with over $70 million long positions on the Binance exchange alone. If the Bitcoin price drops to $110,300, these positions will be liquidated.
Lastly, it's worth mentioning that when equities go bearish, crypto often follows the move because traders reduce leverage. This was evident in September 2017 when Bitcoin dropped below $3,000 due to high FUD, after starting the month near record highs.
As we move forward, it's crucial to stay informed about the latest developments in the crypto market to make informed decisions. Whether you're a seasoned investor or just starting out, understanding the trends and patterns can help you navigate the volatile world of cryptocurrencies.
