Smaller Cryptos Outshine Bitcoin in September
Bitcoin's September performance was modest compared to some other major cryptocurrencies, which saw significant gains. The largest cryptocurrency gained about 7% in value during the month, beating a flat S&P 500 index and gold's 6% decline. However, smaller coins like NEAR surged by 186.6%, while Arbitrum climbed 137.1%. Bitcoin ended the month at $83,995 on September 30.
The crypto market's turnaround can be attributed to the August inflation report, which came in lower than expected. This unexpected news briefly pushed down Treasury yields, making cash and bonds offer lower returns, and led some investors to redirect their funds toward cryptocurrency.
A rally fueled by short covering can lose momentum once those positions close, leaving price movement reliant on genuine buyers. Bitcoin's September gain came from institutional and corporate buyers, such as US spot Bitcoin ETFs attracting $2.4 billion in five days and Strategy adding 1,665 BTC to its holdings.
The surge in smaller coins may be a temporary phenomenon. Their significant gains largely came from a market heavily filled with short positions, which should stop once those short trades close. In contrast, Bitcoin has stronger backing from institutional and corporate investors.