The Breakdown - Bitcoin Seasonality Means A Messy September Set Up

Episode Date: September 3, 2025

Bitcoin just wrapped a volatile Labor Day weekend, with prices dropping 14% from August highs before bouncing slightly above $110K. Analysts debate whether the correction is over, with leverage rebuilding, sentiment turning jittery, and gold surging as a possible leading signal. We dig into Bitcoin’s historical September weakness, why Q3 often stalls out before a Q4 rally, and how whale rotations, global liquidity, and Washington’s packed crypto agenda are shaping the months ahead. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Tuesday, September 2nd, and today we are talking Bitcoin seasonality. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. right, friends. Welcome back from the Labor Day long weekend. Hopefully you took some time to touch grass or chill out for a bit for the last weekend of the summer, but if instead you were locked

to the charts, you would have seen one of the more volatile weekends in recent memory. Bitcoin took another huge dive on Friday, adding another day of losses to a deeply red week. Saturday saw some brief stabilization giving way to a big round of volatility on Sunday night into Monday morning. Bitcoin traded to a low near $107,000, but judging from the reaction on crypto Twitter, you would have thought to the bottom completely fell out. Former hedge funder James LeVish tweeted, Stop it, Bitcoin is not going to 50K. Get a hold of yourselves, people. And while that seemed like an overreaction, Bitcoin is now deep into a serious correction. Pek to Trough, this has been a 14% drawdown from the highs in mid-August. That is, of course, nothing compared to the regular

30% pullbacks from previous bull runs. But then again, Bitcoin holders are a very different breed compared to 2017 or 2020. 15% drawdowns are a much bigger deal if you're running institutional capital. Market structure has also changed a great deal with far less access to insane leverage. That could suggest the drawdown is pretty much over, with Bobby Schell of Voltage Cloud commenting, 15 to 20% pullbacks are the new 30% pullback. There was a small recovery overnight, with Bitcoin rising to around 110,000 to begin Tuesday morning, but who knows whether it will keep heading up. Although it feels like an end of summer rinse out, not that much heat has actually been removed from the market. After a ton of big liquidations in recent weeks, futures open interest

is only 10% lower than it was at the highs. Trader Axel Adley warned, Derivatives pressure remains elevated, keeping the market vulnerable to downside jolts. His chart shows a huge drop in pressure from the highs, but every pullback has seen a big rebuilding of leverage. Santhamint, a research firm that analyzes social media sentiment data, noted that tweets using the phrase buy the dip have dramatically increased over the past week. They wrote, don't interpret Buy the Dip chatter as a definitive bottom signal. A true market floor often coincides with widespread fear and then a lack of interest in buying. real bottom often forms when the crowd loses hope and becomes afraid to buy. Sentiment analyst Brian

Quinn Levin added in a video on Saturday. Clearly, overall in the markets, people are getting antsy and trying to find some entry spots now that prices have cooled down a bit. On the technical side, many are noting that Bitcoin's market value to realize value ratio is showing signs of exhaustion. Crypto-Quant analyst Yon Seident suggested the signal indicates weakening capital inflow. He added, history doesn't repeat, it rhymes, and the signals from MVRV deserve attention. Added to all of that, Bitcoin's hard asset rival is on an absolute tear. Gold is up 5% in two weeks, breaking out of a four-month sideways channel. Bitcoin has tended to follow gold over the past year, so this could be a leading indicator for the next leg of the bull market. Analysts Will Clemente

noted there's a pretty clear explanation, commenting, Gold is like Bitcoin accepted actually behaves how people want Bitcoin to, and it's getting T-wopped by literal central banks. Now, there's a lot of frustration on CT that digital gold is lagging, but TXMC offered an easy solution, tweeting, They don't want you to know this, but you can own both gold and Bitcoin and simply enjoy their dynamic. Basically, sentiment is getting all hot and bothered now that we're heading into the fall. And honestly, that shouldn't be so surprising. While this was one of the most exciting summers for Bitcoin price in recent memory,

seasonality is still a part of market structure. And the history for August and September are dismal. August average is just 1% gains in September is one of the only months that's actually negative. Bitcoin has lost an average of 3.3.3. percent each September. The data is a little more scrambled if you focus only on this cycle, with August by far the worst month. Each of the past four Augusts have been read, with an average loss of 10%. This year's 6.5% loss was the smallest of the four, but still absolutely no fun. September has been middling this cycle, averaging just a 2.5% gain, so historically it would

be pretty reasonable to consider the entire third quarter a complete write-off. That doesn't mean volatility goes away, but price has a habit of going absolutely nowhere in Q3. Now, assuming the bull market still has legs, then the bet is that Q4 will deliver its usual outperformance. November is historically the best month for Bitcoin price, but October is the month that gets all the attention. Affectually known as October, we usually see Bitcoin catch a bid as soon as the month begins and quarterly positions are reset. Now, Bitcoin's seasonality is a little bit like voodoo, so who knows how it'll all play out. But some portion of the market is simply sitting on their hands and waiting for the final quarter to begin. Now, zooming out just a little bit,

Rao Paul, the CEO of Global Macro Investor, believes there's still more run in the same. this bull market. In a Friday post, he wrote, many key parts of the crypto ecosystem are in the waiting room ready to launch. Raul walked through various charts of all coins large and small, noting that basically the entire market is reaching a critical point. These charts all went back multiple cycles and showed that historically these setups are inflection points for crypto to skyrocket. Commenting on the chart of global money supply, which has surged in recent months, he wrote, people need to learn patience. The path is clear, but never ever expect tick for tick perfection. It's the pattern that counts. Continuing, he added,

the rate of change is only going to rise in the key metric of total global liquidity. U.S., EU, China, and Japan all need to roll debts. This is an absurdly bullish backdrop along with the regulatory changes, treasury companies, and sovereign accumulation along with Wall Street acceptance. Summing up, he commented, it looks similar to 2017. As ever, at GMI, we are working with probabilistic frameworks and contextualization. We're not looking for perfect matches, but the rhythm and the rhymes of the market based on deep analysis. Our work suggests, probabilistically speaking, that the cycle

extends into Q1-20206 and possibly Q2-2020s due to a slow business cycle forcing more liquidity for longer. The acceleration phase lies ahead. Now, while there are some good macro reasons to think the bull market will continue, the whales do seem to be heading for the exits. This weekend saw Bitcoin whale worth around $11 billion sell around $200 million worth to rotate into Eath. This was the same whale that sold last weekend, triggering a market crash on Sunday night. In total, they've now rotated around $4 billion from Bitcoin into Ethereum. This was an address that held to size Bitcoin allocation back in 2017, and was never identified as an exchange, so most are assuming it's just an individual with very deep pockets. Could also be an older fund, as there are several

that have held Bitcoin positions of this kind of size for many years. Now, while $4 billion is a huge amount in any context, it's especially large for Ethereum. That's more than Sharplink the second largest Ethereum Treasury company has acquired since they started buying in June. The single whale is about half the size of Tom Lee's Ethereum Treasury company Bitmine. $4 billion is also the entirety of Ethereum ETF inflows for August. While this rotation explains part of the Bitcoin drawdown, it doesn't seem to be a clear-cut win for Ethereum. ETH Outperformance basically stopped a week ago, and it's now trading in lockstep with Bitcoin. In other words, the whales are rotating, but it seems market action is being driven by even bigger factors. Today's episode of The Breakdown

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and invest in your share of the future. Looking ahead to potential catalysts that could shock the market to the upside, the looming return of China has to be near the top of the list. While many point out the Chinese investors never left crypto entirely, it's undeniable that the crypto ban has had a dampening effect. Through that lens, the experimental regulatory regime in Hong Kong has been a narrative to watch and seems to be hitting a crescendo. This weekend saw Hong Kong host the Bitcoin Asia conference, their largest conference since the ban was put in place. The event was headlined by a fireside chat between Eric Trump and Bitcoin magazine CEO David Bailey. After Bailey suggested that China is the quote other Bitcoin superpower, Trump told the audience, there is no question that

you've made an unbelievable mark on Bitcoin and cryptocurrencies. There's no question that China is a hell of a power when it comes to this world and doing it well. Now, most of the reporting focused on the price target with Trump stating, I really believe in the next several years, Bitcoin hits a million dollars. Buy right now, close your eyes, hold it long term, do not get rid of it. It's the greatest asset in the world. We haven't even scratched the surface of what Bitcoin is going to be. Still, the recognition of China as a major Bitcoin power somehow seems even more important. We haven't seen anything like this event in the four years since the ban. There was some reporting that government officials stayed away from the conference to avoid being seen,

talking with the Trump's son, but the fact that the event happened at all is a big shift. As usual, Bailey seems to have his finger on the pulse, stating, Hong Kong has been positioned by Beijing to be the place where they can experiment with their Bitcoin policy in their digital asset policy. So they've identified this as the meeting point for the world to discuss this topic as it relates to China. Now, who knows if that's speculation or inside information, but it's interesting nonetheless. It's certainly clear that Hong Kong wouldn't be hosting a massive Bitcoin event without the tacit approval of government officials on the mainland. The other interesting signpost is that Hong Kong market activity is up dramatically this year. OSL Group, one of the major exchanges in Hong Kong,

reported 58% revenue growth for the first half of the year. Now, the numbers are still quite modest at just $25 million in revenue, but it's still one of the largest exchanges in Hong Kong growing at a rapid clip. Another big catalyst for the end of the year is further progress in Washington. Congress is back in session from today, and there is a packed crypto agenda. Pro-crypto-senators are looking to fast-track their market structure bill through the committee in hopes of getting it passed by the end of the year. There's still a lot of work to do, and it's unclear what it's going to take to get enough Democrat votes. Last month, Banking Committee Chairman Tim Scott said that he's trying to drum up support from outside of the committee to help, quote, provide cover

for those on the committee to vote for it. He gave the impression that there's private approval, but the politics of voting for crypto bills as a Democrat are tricky. Added to that situation, we have the recent reporting that the banking lobby is going to war. They're reportedly looking to close so-called loopholes that allow crypto services to pay rewards for holding stable coins, complaining that this looks too close to interest. Senator Lummis has mentioned that amendments to the Genius Act were punted into the market structure bill, so stable coins are a live debate in Washington this month. And as if that wasn't enough, the appointment of a CFTC chairman is starting to become a bit more critical. Former A16C policy head Brian Quintens is still the presumptive nominee,

but had multiple confirmation hearings canceled during the last session. The CFTC is down to a single commissioner, so is unable to vote on rulemaking until new members are appointed. The committee would need another two commissioners voted through before rulemaking can begin. And while that is possible to do quickly, it all leads into precious floor time. September and October are going to be the critical months to move the crypto agenda forward, as Congress typically grinds to a halt around Thanksgiving. With all that on the docket, it's concerning that the Senate Ag Committee has zero confirmation hearings on their agenda so far. Looming in the background of all of this is the question of how much political capital the administration actually has left on crypto. This weekend saw the unlock for

25% of World Liberty Financial's token supply. The Trump-affiliated project took in billions of dollars in funding earlier in the year, but was largely a sub-story behind the president's meme coin. The token unlock went about as poorly as possible. The project went out at a $30 billion market cap on Monday and immediately started falling. It seems to have stabilized around 24% lower. Still, those that bought in during their first fundraising round have realized a 17x gain on their first tranche of coins. The unlock is basically guaranteed to gather more attention in Washington, with Trump-affiliated

companies reportedly owning around 15% of the supply or $5 billion worth. The Wall Street Journal, for example, already ran the headline, Trump family amasses $5 billion fortune after crypto launch, so expect that article on every desk in Washington as lawmakers return. The article claims that World Liberty tokens are, quote, likely now the Trump's most valuable asset, exceeding their decades-old property portfolio. Even within the crypto community, this is all left a bad taste in many people's mouths. TXMC wrote, The Trump family has raked in billions from their WLFI grift, and crypto is now the largest part of their net worth. The entire second act is a self-enrichment play. Now, that kind of take will resonate

throughout the reporting and make it very difficult to move forward with the crypto agenda. Now, it's possible that it will slide off the headlines in a week or two, but it has given the anti-crypto army another giant cudgel. Look, there are still a lot of lawmakers on both sides of the aisle who earnestly want to pass crypto laws this year, but it is not easy for Democrats to vote for these bills, given all of this activity. So that's essentially the picture heading into the fall, a very messy setup, charts looking weak, and a historically weak September off to a very rough start. That's going to do it for today's breakdown. I appreciate you. listening as always, and until next time, be safe and take care of each other. Peace.