Bitcoin plunged again on Tuesday, losing a total of 12% this month, which is its worst monthly reading since May. It is also the fifth negative figure for September and the worst rate since 2019.
At the same time, US stocks are under pressure, with the S&P 500 on track for its worst month this year. Arcane Research said the 90-day correlation of the two has grown very significantly over the past days.
For Art Hogan, chief strategist at National Securities, this makes sense because Bitcoin tends to fall when other riskier assets also fall. "What's going down now? All the high-flying, high-multiple riskier assets. And Bitcoin has to place itself in that neighborhood," he said.
Bitcoin has been trading volatilely for many years, and in the past decade, September is the only month that it has not yielded positive results. In fact, it lost an average of more than 6% in six of the previous 10 years.
And this year, it was hit by many problems such as the failed rollout of the coin as legal tender in El Salvador and tightened regulatory oversight in the United States and China.
"The news out of China has put a lid on Bitcoin near-term," said Matt Maley, chief market strategist for Miller Tabak + Co. "Investors are starting to worry that more countries are going to put limits on cryptocurrencies."
Bitcoin fell about 3.3% to $ 41,311, and prices near $ 41,000 could act as good support levels.
"You're seeing a day where you're seeing a lot of assets being hit: commodities, as well as stocks, as well as bonds -- and of course, crypto," said JJ Kinahan, chief market strategist at TD Ameritrade. "Many people see it as a riskier asset, so I'm not surprised to see it down along with so many other things today," he added.
Now, it is important to keep a close eye on $ 40,000, as any significant break below this level will cause some traders to downgrade their positions in the short term.
But the situation may change in October, especially since six of the last 10 years have been positive for Bitcoin. Past data said it gains an average of 13% during October.
