September’s struggles for Bitcoin and its impact on the crypto cycle

The anticipated downturn for Bitcoin seems to be approaching as September draws near. Historically, this month poses challenges for Bitcoin prices, and many are asking whether a drop is unavoidable.

Why is September a Tough Month for Bitcoin?

Since 2013, September has been particularly tough for Bitcoin investors, with losses recorded in eight out of the last eleven years. Typically, retail investors cash in their summer gains, which can lead to a pullback as they cover expenses like tuition and taxes.

This recurring “red moon” phenomenon could be seen as a self-fulfilling prophecy; traders might act defensively, which can amplify market declines. However, it’s worth noting that most September pullbacks are relatively modest.

September often marks a local low, but historically, Bitcoin tends to rebound. For instance, back in October 2020, Bitcoin skyrocketed from about $10,800 to over $13,800 within the month, which is an impressive increase of more than 27%.

A Look Back at August: Record Highs and Market Movements

August 2025 was full of drama. Bitcoin reached an all-time peak of $124,533 on August 14, only to fall by 11% to around $110,000 within two weeks.

This decline erased nearly $200 billion from the market cap, largely due to a single event. A previously dormant group of whales sold approximately 24,000 BTC, contributing to price drops below $109,000.

This liquidation event wiped out nearly $900 million in derivative positions, 90% of which were bullish longs, including $150 million in BTC and $320 million in ETH. Despite an 8% decrease, Ethereum demonstrated relative strength, staying above its 100-day moving average.

My own challenges lately have not just been in terms of skill but also emotional. The market’s order books for both spot and derivatives have been thin, which means even moderate sales can lead to significant price swings.

On-chain data from late August indicated a drop in inactive market activity, further dampening bid support.

Macroeconomic uncertainties continue to loom. With the US Federal Reserve’s September policy meeting approaching, traders are navigating the risk of volatility alongside the chance for renewed optimism, especially if macro signals shift positively, perhaps suggesting rate cuts.

Preparing for September: Possible Scenarios

Crypto trader CasAbbé has laid out three potential scenarios for Bitcoin as September unfolds. In what he refers to as the “scope and repair” scenario (at a 40% likelihood), Bitcoin might trade sideways between $110K and $120K for much of the month as excessive leverage diminishes and institutional investors gradually accumulate. Such a strategy could create a healthier base for any upcoming rallies in Q4.

The “second flash” scenario (with a 35% chance) suggests that if Bitcoin drops below $110K, we could see a further wave of liquidations driving prices down to a low of around $100K. Historically, these kinds of corrections can precede solid rebounds.

Lastly, the “Quick Reclaim” scenario (at a 25% likelihood) assumes significant institutional purchases that might help Bitcoin swiftly recover in the $117,000 to $118,000 range, sparking some earlier bullish sentiment.

Throughout September, Abbé advises traders to pay close attention to certain chain activity and macro signals. Particularly, monitoring options market activity leading up to the September 27 expiration could offer valuable insights into positioning and sentiment.

While it’s unclear whether this year’s “red moon” will shift to green, the anticipated thin liquidity, heightened volatility, and possible institutional buying could yield both risks and opportunities this September.