Bitcoin Posts Biggest Monthly Price Loss Since March

Bitcoin faced selling pressure in September as the U.S. dollar rose against major currencies for the first time in six months.

Oct 1, 2020 at 11:46 a.m. UTC
Updated Sep 14, 2021 at 10:03 a.m. UTC

Bitcoin faced selling pressure in September as the U.S. dollar rose against major currencies for the first time in six months.

  • Bitcoin fell by over 7% over the period, the biggest monthly percentage decline since March, according to CoinDesk's Bitcoin Price Index.
  • Back in March, prices fell by nearly 25% as the coronavirus-induced crash in the global equity markets triggered a global dash for cash, sending the dollar higher.
  • Bitcoin's latest monthly decline is again accompanied by an uptick in the greenback.
  • The Dollar Index (DXY), which tracks the greenback's value against majors, gained nearly 1.8% in September – the first monthly rise since March.
  • "BTC seems to be sensitive to a stronger dollar in the short term," Mike Alfred, CEO of Digital Assets Data, told CoinDesk in an email.
  • Bitcoin has moved largely in the opposite direction to the DXY since the coronavirus crisis slammed markets in March.

Bitcoin, gold, S&P 500 and Dollar Index price charts

  • The top cryptocurrency by market cap, bitcoin rallied from $3,867 to $12,400 in the five months to mid-August before falling back to $10,000 last month.
  • Heading the opposite way, the DXY topped out at 103.00 in March and fell to a 16-month low of 91.75 in August. The index rose back above 95.00 last month.
  • The S&P 500, Wall Street's equity index, and gold have moved more or less in lockstep with bitcoin over the past 6.5 months.
  • However, these correlations may be coincidental, according to Alfred – that is, the dollar has been influencing price action in the major markets as well as bitcoin.
  • The Federal Reserve's massive liquidity injections drove the dollar lower in the second quarter and the majority of the third quarter, yielding a rally in all major assets priced in the greenback.
  • As such, the DXY's corrective bounce in September put pressure on bitcoin, gold, and equities. The greenback looked at its most oversold in nearly 40 years during August.

Looking forward

  • Long-term sentiment remains bullish, as evidenced by a continued decline in the number of coins held on exchanges – a sign of investors shifting to holding strategies.
  • In the short run, the cryptocurrency could continue to take cues from the U.S. dollar and the stock markets.
  • "We can't ignore the greenback's breakout from its recent consolidation and expect a continued rally in the dollar to weigh over BTC," said Matthew Dibb, CEO of Stack Funds.
  • Additional bearish pressure may emerge from potential outflows from tech-heavy stocks and the Nasdaq, Dibb added.
  • According to a tweet from chart analyst and trader Josh Rager, bitcoin's late September recovery from $10,000 to $10,800 has kept the bullish price structure intact.
  • Rager now foresees a green month for markets in October ahead of the U.S. elections.
  • At press time, bitcoin is trading near $10,888, up 1.93% on the day.

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