- Bitcoin is set to register its best September in over a decade, pointing to a potentially strong Q4 based on historical trends.
- U.S. Federal Reserve rate cuts, China’s potential stimulus, and ETF inflows have been among the largest contributors to Bitcoin’s positive performance this month.
- Options market data and a series of indicators suggest further bullish momentum, hinting at a high chance of challenging Bitcoin’s all-time high in the short term.
Green September = Green Q4
Bitcoin is on track to post its best-performing September ever, with gains exceeding 8% so far. Historically, September has been a tough month for Bitcoin, closing in the red over 60% of the time. However, this year, Bitcoin appears to have broken free of its “SeptemBear curse,” potentially signaling strong performance in Q4.
In the past 11 years, Bitcoin has seen a positive September only three times (excluding 2024), leading to consistent price growth across all Q4 months in all cases. The average price gain in Q4 following the green September is 65%, meaning that Bitcoin could potentially move up to $110,000 by the end of the year if this pattern holds.
Another historical trend favoring Bitcoin’s Q4 prospects is that 2024 is a halving year. During halving years, Bitcoin has consistently posted positive Q4 returns, regardless of September’s performance, with an average gain of 78%. Applying this to current prices suggests Bitcoin could surge to $118,000 in the coming months.
Source: CoinGlass
What fueled the best-performing September for Bitcoin?
U.S. Federal Reserve began its rate cuts
In September, Bitcoin markets were laser-focused on macroeconomic conditions, particularly the U.S. Federal Reserve’s decision to cut interest rates for the first time in four years. The Fed implemented a 50 basis point cut, with its Summary of Economic Projections (SEP) indicating a potential additional percentage-point reduction by year-end. According to FedWatch data, another rate cut is likely in November, with close to equal odds for either a 25 or 50 basis point cut.
The Fed’s decision to lower rates could bolster global liquidity, a factor historically linked to Bitcoin’s price growth. Data reveals that when liquidity is added to the financial system, Bitcoin’s price has increased in 83% of cases over a 12-month period.
Source: BGeometrics
China is considering a massive stimulus package
Following the Fed’s move, the People’s Bank of China (PBoC) announced a 50 basis point cut to the reserve requirement ratio for mainland banks. It also lowered the seven-day reverse repo rate from 1.7% to 1.5% and reduced the minimum mortgage down payment to 15%. Bloomberg reports that China is also considering injecting up to 1 trillion yuan ($142 billion) into its largest state banks to help revive its struggling economy. All of that suggests that China could soon make its most aggressive monetary push since the pandemic.
Moreover, over the past decade, China has typically injected liquidity into its financial system at an accelerated pace in Q4. This increased liquidity tends to favor Bitcoin, whether Chinese market participants view it as a risk asset or a hedge against inflation. This could partially explain why Q4 is historically Bitcoin’s best-performing quarter, with an average gain of 88% over the last 10 years.
U.S. Bitcoin ETFs experienced a significant boost
The synchronized liquidity push from both the U.S. and China has fueled risk markets, including Bitcoin. U.S. spot Bitcoin ETFs saw average weekly inflows of $300 million in September. This influx was driven by funds from BlackRock, Fidelity, Bitwise, and Ark Invest.
Source: SoSoValue
Furthermore, the U.S. Securities and Exchange Commission (SEC) has approved Nasdaq’s application to list options on BlackRock’s Bitcoin ETF. However, full approval is pending the decisions of the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC).
On the one hand, options on spot Bitcoin ETFs could potentially attract more liquidity and offer institutional investors more tools to hedge on Bitcoin prices. On the other hand, this might increase the “paper” supply of Bitcoin, as institutional investors can gain exposure to Bitcoin without having to purchase it directly, potentially reducing demand for the underlying asset.
Does Q4 have a $100,000 potential?
Weekly timeframes suggest further bullish momentum
Back in March 2024, when Bitcoin hit a new all-time high, we noted the potential formation of a Cup and Handle pattern, which now appears to be nearing completion. The asset has touched the 0.382 Fibonacci retracement level — a common target for the handle formation — and is approaching the upper border. To confirm this pattern, Bitcoin must break out of its descending channel and surpass $68,000 with strong volume. A sustained drop below $50,000 would invalidate this pattern.
The weekly RSI also offers a signal that Q4 could turn beneficial for Bitcoin. The indicator has broken above its descending resistance trendline, and this historically acted as a turning point to reestablish bullish momentum. In addition, the asset price bounced off its two-year support line, suggesting that Bitcoin’s existing consolidation might be soon concluded.
The Ichimoku Cloud analysis on the weekly chart reveals Bitcoin’s price is nearing the cloud’s leading spans, which could act as critical support or resistance levels. Notably, in 2021, Bitcoin regained bullish momentum when it touched the upper leading span. This could be viewed as an additional confirmation of the bearish-to-bullish trend reversal.
Option market participants look for $100,000 by the end of the year
October is typically one of Bitcoin’s best-performing months, with an average gain of 23%. Options data reflects similar optimism for 2024, with the next major expiry on October 25 carrying a notional value of $3.8 billion. Most open interest is concentrated at $70,000, while $75,000 and $77,000 levels have recently seen increased volume.
Source: Laevitas.ch
For the December 27 expiry, which holds the highest open interest, call option contracts outnumber puts by a wide margin. The $90,000 and $100,000 strike prices stand out with the most significant volume and open interest, indicating strong bullish sentiment for Bitcoin by year-end.
Source: Laevitas.ch
More on-chain indicators hint at the bullish resurgence
Bitcoin’s on-chain outlook also appears bullish, with multiple indicators showing positive signs. The Puell Multiple, which compares Bitcoin’s daily issuance to its 365-day moving average and is used to identify tops and bottoms based on miner profitability, recently joined the list. It recently fell below 0.5, indicating a potential market bottom and suggesting a buying signal. Historically, this zone has coincided with key bullish turning points, such as March 2020, July 2021, and late 2022.
Source: CryptoQuant
Furthermore, Bitcoin’s price has moved above the Short-Term Holders’ Realized Price, indicating that short-term holders are in profit, which is historically a bullish signal. For this momentum to continue, Bitcoin needs to stay above $63,200 — the key crossover point.
Source: CryptoQuant
Conclusion
With Bitcoin posting its strongest September on record and benefiting from favorable macroeconomic shifts, such as Fed rate cuts and China’s stimulus considerations, the outlook for Q4 remains optimistic. Historical patterns, bullish technical indicators, and surging demand for Bitcoin ETFs point to the possibility of Bitcoin challenging its all-time high in the short term. However, Bitcoin would first need to move out of the existing consolidation pattern and gain a foothold above $68,000 to support this bullish outlook.
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