Bitcoin enters ‘Rektember’ as rate-hike risk combines with seasonality to threaten rally

Bitcoin has begun September slightly lower, falling 1% to below $78,000 as it enters what is commonly referred to as “Rektember.” Since 2013, September has been bitcoin’s worst-performing month on average, producing a loss of around 3% and only producing five positive monthly returns.

However, the past three Septembers have all delivered gains, offering some encouragement to bitcoin bulls. After climbing 25% in August, BTC’s strongest month since November 2024, the market could be due for a period of consolidation, if not a correction.

The macro backdrop also presents significant headwinds. Fed Chair Kevin Warsh’s hawkish Jackson Hole speech last Friday, which emphasized elevated inflation, has contributed to a global bond sell-off. Many sovereign yields have reached new cycle highs, with the U.S. 10-year Treasury yield rising to 4.784%.

Markets are now pricing in a 66% probability of a 25-basis-point rate hike at the Fed’s Sept. 16 meeting, followed by another potential rate boost by the end of the year. That would take the federal funds target range to 4.00-4.25% by the close of 2026.

Higher interest rates typically weigh on risk assets by tightening financial conditions and supporting the U.S. dollar index. Bitcoin is not alone in facing pressure, with gold falling more than 2% on Tuesday. Meanwhile, continuing U.S. strikes against Iran have added to further instability in the Middle East and pushed WTI crude oil to $88 a barrel, up 2% over the past 24 hours, its highest level since late July.

September is also a negative period for traditional markets. Since 1975, it has been the only month in which the S&P 500 has generated a negative average return.