Bitwise Explains Why Bitcoin (BTC) Will Rally After September

In a note, the Chief Investment Officer at Bitwise, a leading crypto investment company with over $4 billion in assets, said that Bitcoin may see a "significant rally" in the next few months.

Bitcoin (BTC) price showed signs of consolidation this week as traders awaited the upcoming U.S. Consumer Price Index report.

At press time, Bitcoin was trading at $57,000, marking a significant increase from last Friday’s low of $52,000. Interestingly, BTC’s price action has closely aligned with American stocks. On Monday, the Nasdaq 100 and Dow Jones both rose, while Tuesday, Sept. 10, saw both indexes waver.

But what does this mean for Bitcoin in the coming months? According to Bitwise, Bitcoin may be poised for a “significant rally.” Here's why.

In a note, the Chief Investment Officer at Bitwise, a leading crypto investment firm with over $4 billion in assets, outlined three key reasons why Bitcoin could be set for a rally.

First, the study, which analyzed data from 2010 to 2024, found that September was the worst month for Bitcoin, with an average return of minus 4.5%. It was also the worst month for the tech-heavy Nasdaq 100 index, which typically sees a 6% drop.

However, Hougan also noted that it was typically followed by a rebound. Specifically, October was the best month for Bitcoin, with an average return of 8.5%, while November was the best month for the Nasdaq 100, with an average gain of 6%.

Second, the Federal Reserve is expected to start cutting interest rates in September and deliver two more cuts by the end of the year. Hougan predicts the bank will implement 125 bps worth of cuts by December, which could push risky assets higher.

Third, Hougan expects Bitcoin to rebound as the market gains more clarity on the outcome of the general election. Polymarket suggests that Donald Trump has a higher chance of defeating Kamala Harris, although other mainstream polls show the two candidates are quite close and within the margin of error.

Moreover, despite previous outflows, ETF inflows remained strong. More specifically, Hougan believes that investment advisors are adopting Bitcoin funds faster than “any new ETF in history.”

In fact, some of the biggest hedge funds, such as Citadel, Millennium, and Bridgewater Associates, have invested in Bitcoin.

However, the bullish case for Bitcoin does come with some risks. Notably, Bitcoin is currently on track to form a death cross, as the gap between the 200-day and 50-day Exponential Moving Averages continues to narrow.

This indicator is used to identify potential bearish trends and typically occurs when the 50-day EMA falls below the 200-day EMA from above. It has moved from 4% last week to less than 1%.

In most periods, Bitcoin tends to drop sharply after this crossover happens.