Bitcoin faces “critical” September: Volatility risks and investor shifts towards Ethereum
4 SEPT, 2025
By Bitwise
Author: André Dragosch, Head of Research for Europe at Bitwise
Historically, September has always proven to be one of the worst months for Bitcoin performance, in line with the weak seasonality also observed in US equity markets (as shown in our chart).
As a result, investor expectations for Bitcoin and other crypto assets this month should remain contained, even though important macro catalysts are looming on the horizon that could drive heightened market volatility in the coming weeks.
Among them is the vote of confidence that French Prime Minister François Bayrou has scheduled for 8 September, a crucial vote centred on his austerity-driven budget plan. In the event of defeat – as widely expected – the government could fall, triggering further political chaos and possibly even early elections in France. The French finance minister has even warned that France might need an IMF bailout, as funding costs have risen following political turmoil.
All this could lead to an increase in risks related to sovereign bonds worldwide. In this context, it is important to note that Bitcoin could, in fact, act as a form of “portfolio insurance” against rising sovereign default risk.
Another positive catalyst for Bitcoin could be the much-anticipated FOMC (Federal Open Market Committee) meeting, scheduled for 16–17 September. At the time of writing, Fed Funds Futures are pricing in an 87% probability of a 25 basis point rate cut. We expect rate cuts to represent a net positive for crypto assets, thanks to a steeper yield curve and the acceleration of US money supply growth.
Beyond these macro developments, we are observing a steady flow of investor rotation from BTC into ETH. For example, last week there were net inflows of +$1.332 billion into global Ethereum ETPs, while global Bitcoin ETPsattracted only +$682 million. Over the past 30 trading days, around 95% of global ETP flows have been concentrated exclusively in Ethereum.
One reason for this rotation appears to be the general increase in global risk appetite, which tends to favour all crypto assets, particularly altcoins.
In addition, ETH purchases by companies with Ethereum treasuries, such as Tom Lee’s BitMine, have recently accelerated, rising by +187% in the last 30 days alone (source: strategicethreserve.xyz).
Another key reason behind this structural shift towards ETH may be the growing uncertainty surrounding Bitcoin’s protocol rules. More specifically, dissent is increasing within the Bitcoin community regarding the dominant node software. The debate about the future of the cryptocurrency is focusing on two opposing visions (Core vs Knots):
- On one side, Core advocates for full openness of the network, accepting greater on-chain data in the belief that permissionless innovation is Bitcoin’s true strength.
- On the other, Knots supports the idea of Bitcoin as financial infrastructure, proposing tools to reduce spam and maintain lighter, more efficient consensus, without changing the core protocol rules.
This debate highlights a clear trade-off: more openness means higher hardware costs and a potential reduction in decentralisation, while filtering mechanisms could reduce such costs and, paradoxically, strengthen decentralisation.
In any case, it is important to stress that, while uncertainty around Ethereum’s roadmap has decreased after the May Pectra upgrade, uncertainty regarding Bitcoin’s next steps has grown with the Core vs Knots conflict. This may partly explain the recent rotation from BTC to ETH.
