Red September: Bitcoin’s Toughest Month Has Begun

September has begun with Bitcoin facing its toughest historical test. Over the past 15 years, the cryptocurrency has fallen by an average of 4% during the month, a notable decline given that its price has risen more than 10,000-fold over that period.

Bitcoin reclaimed the $80,000 mark last week but then appeared unable to move higher. It had already failed at that level in May, subsequently dropping back to $60,000. Signs of selling pressure have emerged through Bitcoin spot ETFs. The funds recorded their strongest month of the year in August, with $3.52 billion in inflows, but investors withdrew $236 million on Sept. 1, the largest outflow since late July.

Large investors appear to be taking profits, weakening hopes that Bitcoin could soon return to a record high of $126,000. Kevin Warsh, the new head of the U.S. Federal Reserve, added to the pressure last weekend by warning in a speech about high inflation risks. His remarks were seen as a signal that he may favor raising interest rates rather than cutting them. Bitcoin traditionally reacts nervously to rate increases.

There was one important counterpoint. Strategy, the software company led by Michael Saylor and the world’s largest publicly traded Bitcoin holder, bought 4,603 Bitcoin for $370 million. The company now holds about 845,000 Bitcoin. Saylor had recently attracted attention by selling Bitcoin for the first time in years to fund promised dividends for a new class of shares. He then used improved market sentiment to issue new shares and buy Bitcoin again. Investors welcomed the move, and Strategy’s stock has gained 45% in a month, compared with Bitcoin’s 26% rise.

The market now knows that Saylor’s occasional sale is not necessarily a catastrophe, despite his motto, “Never sell your Bitcoin.” A large-scale sale could still weigh heavily on the market if Strategy ever ran into financial trouble, although the article says that is not currently the case. Meanwhile, hackers who stole data from Berlin’s state administration are demanding 30 Bitcoin, worth about 2 million euros, or they threaten to publish the data. Berlin says it will not pay. The article notes that converting stolen Bitcoin into euros can be difficult because blockchain transactions remain permanently recorded, creating risks for anyone trying to launder the funds.