Why Does the Cryptocurrency Market Fluctuate in September?

As of September 5, 2025, the crypto market is experiencing a period of strong volatility, often described as “the collapse of crypto,” OR “why crypto is collapsing” as Bitcoin and other major assets have seen significant price drops. This downturn is believed to be due to a combination of historical market patterns, significant on-chain events, and macroeconomic instability. The Main Factors Driving the Decline of the Crypto Market

1. Historical Model “Red September” Seasonal weaknesses: Traditionally, September is a challenging month for both the crypto market and traditional securities. Bitcoin has ended the month with declines in eight out of the last ten September months. Low liquidity: Trading volumes often decrease at the end of summer, making the market susceptible to large price fluctuations when large sell orders are executed. Portfolio rebalancing: Investors and institutions often rebalance their portfolios in September, engaging in activities like tax loss harvesting, which can lead to increased selling pressure. 2 Whale Sell-Offs and Liquidations Large-scale BTC sell-off: A Bitcoin “whale” has executed a large sell-off of 24,000 BTC, worth approximately 2.7 billion dollars. This event has triggered a chain reaction of leverage liquidations across the market. Market-wide liquidations: The actions of the whale alone have been the main catalyst for nearly 900 million dollars in liquidations across the market, forcing the closure of leverage positions and accelerating the price fall.
2. Derivative Financial Instruments and Macroeconomic Instability Option Expiration: The recent expiration of over $13.8 billion in Bitcoin options and $1.28 billion in Ethereum options has increased market volatility. Such large-scale expirations force traders to adjust their positions, creating significant price pressure. The Federal Reserve's Decision: The uncertainty surrounding upcoming U.S. macroeconomic data and the Federal Reserve's interest rate decisions is the main source of fear for the market. The continued delay in the anticipated interest rate cuts is causing investors to be more risk-averse. Impact and Outlook of the Market Bearish: The total market capitalization of the crypto market has significantly fallen, losing over 44 billion dollars in just 24 hours. Performance of major assets: Bitcoin (BTC) has fallen below the 110,000 dollar mark. Ethereum (ETH) slid down to 4,400 dollars. Consensus among analysts: Although short-term risks remain high, many analysts believe that the downturn in September is a “restructuring” that may set the stage for a strong bull run in Q4, traditionally referred to as “Uptober,” as structural factors such as ETF capital flows and regulatory clarity remain long-term bullish drivers. Summary The current volatility of the crypto market is a complex interplay between historical seasonality, whale activity on-chain, and broader macroeconomic factors. The downturn in September 2025, while significant, is viewed by many as a short-term correction rather than a fundamental collapse. This phase underscores the importance of risk management and presents a potential entry point for long-term investors.