Is Bitcoin a buy in September?

During the last decade, Bitcoin‘s (BTC 680.40%) price rise 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 does not mean that 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 the price have become more solid. And one in particular looks like it might unfold in the same way as it has in the past.

Seasons (and prices) come and go

As scorching summer temperatures give way to cooler fall days, historically Bitcoin’s price has also cooled as September rolls around. Bitcoin performs worse in September than in any other month – and it’s not even close.

On average, Bitcoin shows almost a 5% decline in September. If you’re looking for the last time Bitcoin had a positive September, you have to go all the way back to 2016, when it posted a modest 6% gain. This means that it has been five years in a row that Bitcoin has fallen in September.

To speculate a little, this September looks set to be just like the previous ones. Hopes for a break from the status quo are likely to be thwarted by an important event: the meeting of the Federal Reserve.

The meeting took place on 21 September and interest rates were at the top of the agenda. Over the past year, the Federal Reserve has maintained the position that combating inflation is paramount to ensuring that economic conditions can improve. Its main weapon to combat persistent inflation from the covid-19 pandemic is to raise interest rates. It was announced at the recent meeting that interest rates would rise once again, this time to 0.75%, in line with what analysts expected.

When interest rates rise, the prospects for economic growth are hampered because the cost of borrowing money rises. Cautious investors take note of this and usually try to find safe havens for their money instead of riskier assets like tech stocks or cryptocurrencies like Bitcoin. This additional interest rate hike has further reduced the appetite for riskier assets as investors worry about the possibility of a looming recession.

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 problems are usually resolved by October. Since Bitcoin was created in 2009, it has produced negative returns only four times in October. On average, October returns roughly 26%, making it the fourth best month historically for Bitcoin.

Even better, November is the second best, with Bitcoin’s price increasing by an average of 40%. Although September is historically one of Bitcoin’s worst performing months, October and November have historically given investors some much-needed breathing space.

When you maintain an extended time frame, it becomes clear that investing in September still pays off over years, not months. Despite a decline of around 75% from its all-time high in November 2021, Bitcoin has still returned nearly 75% over the past three years. Zoom out even more and these numbers increase considerably. Over the past five years, Bitcoin has increased by an astounding 1,800%. Over the same period S&P 500 increased only 45%. Instead of selling, investors should use this time to strengthen their Bitcoin position while prices are down and position themselves for long-term success.