Brief Overview
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In September, Bitcoin rose by 7%, surpassing a stagnant S&P 500 and gold, which dropped by 6%. Meanwhile, NEAR skyrocketed by 186.6%, and Arbitrum gained 137.1%.
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During five days, Bitcoin ETFs pulled in $2.4 billion, and Strategy acquired 1,665 BTC, indicating stronger institutional backing for Bitcoin compared to altcoins driven by short-squeeze activity.
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Futures traders are pricing in a 64% likelihood of another interest rate hike from the Fed on October 27-28, which could jeopardize the fragile rally of altcoins.
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In September 2026, Bitcoin (CRYPTO:BTC) recorded an increase of around 7%. While both the S&P 500 index showed little change and gold dropped over 6%, several other cryptocurrencies significantly outperformed Bitcoin. In particular, NEAR (CRYPTO:NEAR) surged 186.6%, and Arbitrum (CRYPTO:ARB) rose 137.1%.
By September 30, Bitcoin concluded the month at $83,995. The question remains: what sparked the renewed attention towards cryptocurrencies in September, and why did a portion of the investments gravitate towards smaller coins instead of Bitcoin?
Easing Inflation in August Triggered a Crypto Short Squeeze
According to data from Santiment, the cryptocurrency market’s rebound can be attributed to the lower-than-expected inflation report in August. This prompted a dip in Treasury yields, resulting in smaller returns from cash and bonds. Consequently, some investors shifted their focus toward cryptocurrency.
The market for cryptocurrencies reacted more sharply than that for stocks, in part due to traders who had bet against prices rising. When cryptocurrency values began to increase, these traders were forced to buy back assets to mitigate losses. At the same time, exchanges liquidated borrowed accounts once traders’ collateral reserves were exhausted, further amplifying purchase orders and turning moderate positive news into a significant rally.
However, a short-covering rally may eventually lose steam once those positions are closed. Consequently, price trends will depend more on actual buyers, but Santiment’s data does not clarify how much of Bitcoin’s increase in September was due to forced buying.
Growth in Bitcoin Attributed to ETFs and Institutional Investments
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Bitcoin’s recent rally saw a surge of buyers eager to acquire the asset. From September 21 to September 25, US spot Bitcoin ETFs attracted approximately $2.4 billion, although daily inflows saw a decrease from $999 million to $134 million.
