How U.S. Macroeconomic Data and Bitcoin Prices are Connected: What to Watch in September

Bitcoin has only seen price increases in September three times over the past 12 years. What do experts predict this year?

September is historically a weak month for Bitcoin and the broader crypto market. What could change this year, and what do analysts expect for mid-month?

September has traditionally been a down month for Bitcoin: out of the last 12 years, the cryptocurrency only saw gains ranging from 2% to 6% in three of those years, according to Coinglass. Despite this trend, analysts from Binance have identified some positive factors that could influence Bitcoin’s performance in September 2024.

One major topic this month is the potential increase in the U.S. Federal Reserve’s (Fed) base interest rate during its meeting on September 17-18. After keeping rates steady over the past eight meetings, all eyes are on the decision to be announced on September 18.

How Fed Decisions and U.S. Macroeconomic Data Affect Cryptocurrencies: Key Considerations

“A reduction in their target rate should hopefully lead to a new influx of money into the economy,” the report states.

In addition, Binance analysts noted another positive factor: the U.S. Bureau of Economic Analysis revised second-quarter GDP growth data up to 3%, exceeding expectations.

The Fed has two main mandates under U.S. monetary policy: to keep inflation within a specific range (currently 2%) and to maintain low unemployment levels.

Inflation has been running between 3.1% and 3.5% for about a year, recently dropping slightly to 2.9% in July. During this period, the unemployment rate increased from 3.8% to 4.2%, indicating a potential economic recession in the U.S.

The Fed is expected to inject money into the economy through interest rate cuts, which will ease lending conditions. This, in turn, will allow companies to access cheaper credit for business expansion, theoretically leading to job creation.

This could impact the crypto market since cryptocurrencies are considered risky assets sensitive to changes in monetary policy. This is supported by the high correlation observed between cryptocurrency and traditional markets during the anticipation of Fed rate decisions. According to intoTheBlock, since early August, this correlation has more than doubled to 0.43 relative to the Nasdaq Technology Index.

Experts also highlighted the stablecoin market, which remains one of the most widely used blockchain products amid macroeconomic uncertainty. Despite an overall decline in the crypto market capitalization in August, the stablecoin sector showed a combined capitalization growth exceeding $171 billion. This growth has continued since the beginning of 2023, according to Coinmarketcap.