As Crypto Traders Await the Fed's Decision, Bitcoin Dominance Could Return in September

Bitcoin may be poised to reclaim its dominance in the cryptocurrency market this September even if only for a short while.

‍

The world’s largest digital asset has had a lackluster summer compared to other cryptocurrencies. While Ethereum (ETH) has captured most of the spotlight, Bitcoin slipped 7% in August, while ETH surged 17%. Looking at the past two months combined, Bitcoin is barely up 1%, in stark contrast to Ethereum’s impressive 74% gain.

‍

Data from TradingView shows Bitcoin’s dominance a metric that tracks its share of the total crypto market has dropped by more than 5% over the last month.

‍

However, in a market crowded with newly listed crypto-related stocks companies aiming to deliver returns by aggressively investing in digital assets September could shake things up. If volatility returns, as many traders expect, Bitcoin might once again become the preferred choice for short-term opportunities.

‍

“Unlike the previous cycle, we’re not seeing signs of excessive leverage this time,” explained Matthew Sigel, head of digital assets research at VanEck. “But we’ve seen a surge in new crypto-related stocks that need strong buying to sustain their prices. If retail demand fades, those stocks will likely struggle, and Bitcoin could emerge as an outperformer within the space.”

‍

September’s Track Record: Historically a Weak Month

History, however, isn’t on Bitcoin’s side this time of year. September has typically been one of its weakest months. While Bitcoin finished in positive territory the past two Septembers, CoinGlass data shows an average decline of 3.7% and a median drop of 4.3% going back to 2013.

‍

October tells a different story. Dubbed “Uptober” by crypto enthusiasts, the month has been far kinder to Bitcoin. Since 2013, Bitcoin has posted gains in nearly every October except two, with both average and median returns hovering around 21%.

‍

ETH-BTC Ratio and Market Dynamics

“Bitcoin will likely trade sideways at the start of September, and that’s when ETH-BTC will probably hit local highs,” noted Satraj Bambra, CEO of Rails, a hybrid crypto exchange. “Once that ratio cools off, Bitcoin dominance could make a short-term comeback against Ethereum.”

‍

The ETH-BTC ratio is a key indicator for traders it measures Ethereum’s performance relative to Bitcoin. A rising ratio signals ETH is outperforming BTC, while a decline suggests Bitcoin is regaining ground.

‍

Fed Policy and Macro Conditions in Focus

Investors also have their eyes on the Federal Reserve’s upcoming policy meeting on September 16-17, following Chair Jerome Powell’s recent comments hinting at a possible interest rate cut. Bitcoin tends to thrive in liquidity-friendly environments, and any dovish shift from the Fed could act as a tailwind.

‍

That said, risks remain. Bitcoin is still susceptible to sharp corrections during broad-market sell-offs. If macroeconomic conditions worsen, the cryptocurrency could experience further weakness. Nonetheless, long-term bullish sentiment persists, supported by steady accumulation from large holders and consistent inflows into Bitcoin exchange-traded funds (ETFs).

‍

A Quick Look Back: Bitcoin’s Record High

It’s worth noting that Bitcoin recently set a new all-time high of nearly $125,000 on August 13, cementing its status as the dominant force in the digital asset space even after a choppy summer.

‍