Market Bloodbath: S&P 500 Shed $1.7 Trillion so Far in September, Outstripping Crypto Market Downturn

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As a seasoned crypto investor with a decade of experience under my belt, I must admit that September has always been a tricky month for me. The stock market’s gloomy outlook, coupled with the historical ‘September Effect’ in both traditional equities and cryptocurrencies, often leaves me feeling like a leaf caught in an autumn wind.

In simpler terms, the value of companies represented by the S&P 500, a key indicator for the stock market, has decreased by approximately $1.7 trillion during September. This drop might be due to anticipated reductions in interest rates by the Federal Reserve towards the end of this month.

Based on reports from Kobeissi Letter on social media platform X (previously known as Twitter), the stock market has yet to experience a single upward day this month. The S&P 500 has already fallen by over 3% during the initial week of the month.

So far in September, every trading day has seen a decline in the stock market. To be exact, as of today’s drop, the S&P 500 has lost approximately 3.4% this month, and we’re only at the beginning of it. This means that around $1.7 trillion of the total market capitalization of the S&P 500 has been wiped out already. It seems like the market might not be as eager for rate cuts as initially thought.

— The Kobeissi Letter (@KobeissiLetter) September 6, 2024

Significantly, the combined value of all cryptocurrencies is approximately $1.9 billion. This means that almost all of this value, following a recent correction, has been wiped out by the S&P 500 in just one week.

Over the last week, the cost of Bitcoin has dropped by over 7%, settling slightly above $54,000. Meanwhile, Ethereum, the second most valuable cryptocurrency, has experienced a decrease of approximately 6.9%, currently trading at around $2,290.

In the opening week of September, the total value of cryptocurrencies decreased by approximately $100 billion, underscoring its current limited market scope. Meanwhile, equities suffered a loss exceeding $1 trillion in one trading session earlier this month due to a significant correction in Nvidia (NVDA).

In addition to Nvidia experiencing a slowdown in growth, two manufacturing activity indicators have consistently demonstrated sluggish activity within the sector that’s been impacted by increased interest rates. Later this week, we can expect the August U.S. employment report to be published, potentially causing more market fluctuations, as an unexpectedly higher unemployment rate last month triggered a stock market downturn.

Remarkably, based on data from Investopedia, September is the only month in the calendar year that has historically shown a trend of negative performance in the stock market. This phenomenon, called the September Effect, describes the tendency for the market to experience less-than-optimal returns during this month.

A mystery trader has managed to make more than $10 million betting on volatility rising this month, which also negatively affects the cryptocurrency space. CCData has  revealed that the September Effect is also present in the cryptocurrency space, with Bitcoin’s September performance from 2010 to 2023 averaging a negative return of 4.5%.

In our latest Chart Analysis, we delve into Bitcoin’s journey from September 2010 up until 2023.

— CCData (@CCData_io) September 3, 2024

Over a span of 13 years, Bitcoin’s price increase in September has been positive just six times. Conversely, the months of April, November, and October have consistently delivered higher returns, averaging approximately 35.6%, 39.2%, and 28.7% respectively.

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2024-09-06 19:42