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Federal Reserve Chairman Jerome Powell warned that the central bank will continue to use the “tools forcefully” to bring down inflation, which is close to its highest level in 40 years. He cautioned that the restrictive policy may remain for some time and warned that it could “bring some pain to households and businesses.”

The United States equities markets reacted negatively to Powell’s comments with the Dow Jones Industrial Average dropping more than 600 points. The cryptocurrency markets also witnessed sharp selling with Bitcoin (BTC) and most altcoins threatening to break below their immediate support levels.

Along with a not-so-supportive macro environment, Bitcoin’s historical data for September also presents a negative picture. According to CoinGlass data, Bitcoin has witnessed an average decline of 6% in September and barring 2015 and 2016, the month has produced negative returns for investors between 2013 and 2021.

Could Bitcoin and major altcoins remain weak in the near term? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin’s shallow rebound off the support line of the ascending channel indicated that bulls are cautious at higher levels. The downsloping 20-day exponential moving average (EMA) ($22,249) and the relative strength index (RSI) in the negative territory, indicate that bears have the upper hand.

A $750 pump on Aug. 26 took Bitcoin (BTC) from $21,120 to $21,870 in less than two hours. However, the movement was completely erased after comments from U.S. Federal Reserve Chair Jerome Powell reiterated the bank’s commitment to contain inflation by tightening the economy. Following Powell’s speech, BTC price dropped as low as $20,700. 

At Jackson Hole, Powell specifically mentioned that "the historical record cautions strongly against prematurely loosening policy." Right after those remarks, the U.S. stock market indexes reacted negatively, with the S&P 500 dropping 2.2% within the hour.

On the Bitcoin chart, the affable “Bart candle,” a reference to the shape of Bart Simpson’s head, and a descriptor of BTC’s up and down price action, surfaced. Outside of these unpredictable technical analysis indicators, there are other indicators that pointed to Bitcon’s broader neutral-to-bearish sentiment.

Regulators up the pace on crypto legislation

Newsflow for cryptocurrencies has been negative for quite some time and this is also weighing on investor sentiment. On Aug. 24, the U.S. Federal Deposit Insurance Corporation (FDIC) issued cease and desist letters to five companies for allegedly making false representations about deposit insurance related to cryptocurrencies, including FTX US.

On Aug. 25, India-based crypto exchange CoinSwitch had its premises searched by Anti-Money Laundering agents over alleged violations of forex laws. Launched in India in 2020, CoinSwitch successfully raised capital from Coinbase Ventures, Andreessen Horowitz, Sequoia and Tiger Global.

XRP price saw a major spike on Aug. 26, hinting at a possible effect from some big traders.

Large XRP transfers, Ripple Swell Global event

Notably, XRP's price jumped 6% to $0.37, a two-week high, during the early London hours. The token's upside move occurred hours after its network processed three massive transfers worth $51 million involving crypto exchanges Bitso and FTX, as highlighted by Whale Alert.

XRP's gains also came as a part of a broader upside move that started on Aug. 25, a day after Ripple announced its flagship event, "Ripple Swell Global," to be held in London in November 2022. The market has seen similar reactions around the Swell event in the past.

Bearish reversal setup in play

XRP's intraday spike left behind a "Graveyard Doji," a bearish reversal candlestick with open, close and low prices near each other with a long upper wick. This candlestick suggests that the price rally witnessed at the beginning of the session was overwhelmed by bears by the end of it.

XRP now trades nearly 4% below its intraday high, testing a support confluence. The confluence comprises the upper trendline of XRP's previous "ascending triangle" (at $0.35) and the 50-4H exponential moving average (50-4H EMA; the red wave in the chart above) near $0.343.

XRP price saw a major spike on Aug. 26, hinting at a possible effect from some big traders.

Large XRP transfers, Ripple Swell Global event

Notably, XRP's price jumped 6% to $0.37, a two-week high, during the early London hours. The token's upside move occurred hours after its network processed three massive transfers worth $51 million involving crypto exchanges Bitso and FTX, as highlighted by Whale Alert.

XRP's gains also came as a part of a broader upside move that started on Aug. 25, a day after Ripple announced its flagship event, "Ripple Swell Global," to be held in London in November 2022. The market has seen similar reactions to the Swell event in the past.

Bearish reversal setup in play

XRP's intraday spike left behind a "Graveyard Doji," a bearish reversal candlestick with open, close and low prices near each other with a long upper wick. This candlestick suggests that the price rally witnessed at the beginning of the session was overwhelmed by bears by the end of it.

XRP now trades nearly 4% below its intraday high, testing a support confluence. The confluence comprises the upper trendline of XRP's previous "ascending triangle" (at $0.35) and the 50-4H exponential moving average (50-4H EMA; the red wave in the chart above) near $0.343.

Bitcoin (BTC) rose rapidly later on Aug. 26 as fresh economic data from the United States furthered hopes of a pivot from the Federal Reserve.

Bitcoin bounces but preserves intraday trend

Data from Cointelegraph Markets Pro and TradingView tracked a 3.55% rise for BTC/USD on the day, allowing the pair to match highs from earlier in the week.

The move marked a surprise about-turn for Bitcoin, which hours before had seen selling pressure as markets awaited cues from Fed Chair Jerome Powell's Jackson Hole symposium speech.

With that speech still to come at the time of writing, abullish catalyst came in the form of the latest Personal Consumption Expenditures Price Index (PCE) readout, which was lower than expected.

Analysts reacted positively, as the numbers added weight to the idea that U.S. inflation had already peaked — a narrative already supported by the Consumer Price Index (CPI).

Bitcoin (BTC) bulls should not get excited about the recovery from the June lows of $17,500 just yet as BTC heads into its riskiest month in the coming days.

The psychology behind the "September effect"

Historic data shows September being Bitcoin's most worst month between 2013 and 2021, except in 2015 and 2016. At the same time, the average Bitcoin price decline in the month is a modest -6%.

Interestingly, Bitcoin's poor track record across the previous September months coincides with similar downturns in the stock market. For instance, the average decline of the U.S. benchmark S&P 500 in September is 0.7% in the last 25 years.

Traditional chart analysts have dubbed this annual drop-off as the "September effect."

Analysts argue that investors exit their market positions after returning from their summer vacations in September to lock gains, or even tax losses, ahead of the year's close.