The cryptocurrency market is attempting to shake off the weekend blues as September begins, but history suggests this could be just the calm before the storm.
Market sentiment has plummeted, according to the Crypto Fear and Greed Index. Sentiment has exited neutral territory and dropped into the “fear” zone, falling from 75 out of 100 in mid-August to 46 today — the worst score since mid-June.
This shift in sentiment comes as traders brace for what’s historically been crypto’s cruelest month: “Red Septmber.” Bitcoin has dropped an average of 3.77% in price each September since 2013.
The broader macroeconomic picture adds another layer of complexity. The Federal Reserve’s September 16-17 policy meeting may well be one of the most contentious in years. With markets implying an 87% chance of a 0.25% cut, the crypto market finds itself at a crossroads between seasonal weakness and potential monetary policy relief.
Meanwhile, traditional markets are showing mixed signals, with the S&P 500 futures pointing to a positive open on Tuesday after Friday’s volatility, while inflation remains above the Fed’s target with core CPI at 3.1%.
But while the stock market is on holiday in the United States, crypto — of course — never rests. Here’s what the Bitcoin charts are showing today:
Bitcoin is showing resilience with a modest 0.53% gain to $108,842, recovering from an intraday low of $107,270. The flagship cryptocurrency has been bounced around into its current range (the white dotted line in the chart below), suggesting buyers are defending the psychologically important $108,000 level.
Bitcoin’s Average Directional Index, or ADX, currently stands at 20, indicating no clear trend at the comment. ADX measures trend strength on a scale from 0-100, where readings below 25 suggest choppy, directionless tradings.
In this case, Bitcoin’s score of 20 suggests its inability to move further up to new all-time highs or further down towards a death cross for now. For traders, this means Bitcoin is currently in a consolidation phase where range-trading strategies might outperform trend-following approaches.
The Relative Strength Index at 40 points shows that the Red September effect is real: Traders are starting to sell their coins faster than usual. The Relative Strength Index, or RSI, measures market momentum on a scale from 0 to 100, where readings above 70 indicate overbought conditions and under 30 suggest oversold.
Right now Bitcoin is approaching oversold territory, with more people interested in getting rid of their coins than in buying them.
