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Is Bitcoin a Buy in September?

The Motley Fool logo The Motley Fool 9/27/2022 RJ Fulton
Is Bitcoin a Buy in September? © Provided by The Motley Fool Is Bitcoin a Buy in September?

Over the last decade, Bitcoin's (CRYPTO: BTC) price ascension proves that investors who take a long-term approach to investing have the most to gain. Decisions should always be made with a broad horizon, but that doesn't mean trends and statistics in a shorter time frame should be completely ignored. 

With more than 12 years of history now under Bitcoin's belt, patterns around its price have become more solidified. And one in particular looks as though it might unfold the same way it has in years past.

Seasons (and prices) come and go

As scorching summer temperatures give way to cooler autumn days, historically Bitcoin's price has also cooled off when September rolls around. Bitcoin performs worse in September than in any other month -- and it's not even close.

On average, Bitcoin posts nearly a 5% decline in September. If you're looking for the last time Bitcoin had a positive September, you will have to go all the way back to 2016 when it made a modest 6% gain. That means there have been five straight years that Bitcoin has declined in September.

To speculate a little, this September is shaping up to be just like the past ones. Hopes for a break from the status quo are likely to be hindered due to one important event: the meeting of the Federal Reserve. 

The meeting took place on Sept. 21 and at the forefront of the agenda were interest rates. Over the last year, the Federal Reserve has maintained the position that fighting inflation is of the utmost importance to ensure that economic conditions can improve. Its major weapon to fight lingering inflation from the COVID-19 pandemic is raising interest rates. It was announced at the recent meeting that rates would be rising yet again, this time to the tune of 0.75%, in line with what analysts expected. 

When interest rates rise, the prospect of economic growth is hampered due to the cost of borrowing money increasing. Cautious investors take notice of this and usually try to find safe havens for their cash instead of riskier assets like tech stocks or cryptocurrencies such as Bitcoin. This additional interest rate increase has lessened the appetite for riskier assets even further as investors become concerned with the possibility of a recession looming. 

Time to zoom out

For investors worried about Bitcoin falling this month, their fears should be taken with a grain of salt. Data shows that September woes are typically remedied when October comes around. Since Bitcoin's creation in 2009, it has put in a negative return just four times in October. On average, October produces returns of roughly 26%, making it the fourth-best month historically for Bitcoin.

Even better, November is the second-best, with Bitcoin's price increasing on average by 40%. Even though September is historically one of Bitcoin's worst-performing months, October and November have historically provided investors with some much-needed respite.

When you maintain an extended time frame, it becomes clear that investing in September still produces returns over the course of years, not months. Despite being down around 75% from its all-time high in November 2021, Bitcoin has still produced a return of nearly 75% in the last three years. Zoom out even more and those numbers increase significantly. In the last five years, Bitcoin increased an astounding 1,800%. Over the same time span, the S&P 500 increased just 45%. Rather than selling, investors should use this time to fortify their Bitcoin position while prices are down and position themselves for long-term success.


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RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.


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