Bitcoin will produce a negative performance for September. Then it will return to 'aggressive volatility.' 

Cryptocurrency exchange Kraken has predicted this in its August 2020 volatility report. It said that September would bring excessively negative returns for Bitcoin (BTC). Kraken's report notes that historically, September is Bitcoin's worst-performing month. This month, it has an average return of -7%. 

Bitcoin has underperformed in 2020. September's performance was likely to be even worse than usual. So there is a bearish outlook for the short-term. But the report identifies some glimmers of hope. This includes that a record share of Bitcoin's supply has not moved in more than 12 months. Kraken noted that historically, this dynamic had foreshadowed a new bull market.

Kraken's report adds that Bitcoin is likely to see aggressive fluctuations. This is as the markets move further away from July's local low or "suppressed pocket" for volatility:

Bitcoin's annualized volatility bottomed between 15% and 30% twelve times in the past. This was before climbing, on average, to 140% and returning +196% over 94 days. As of the end of August, 38 days have passed since the 23% volatility set on July 24. Volatility has risen to 44%, and price gaining +25% So, history indicates that there may be ample room for higher volatility and gains in the future.

The report says that September has historically produced the weakest volatility on average. It suggested that BTC may not see accelerated volatility soon. It will not happen until at least the fourth quarter of 2020. But, Kraken's crystal ball is not necessarily a reliable guide to future events. The exchange recently predicted that a BTC rally of between 50% and 200% was imminent on August 10. This was when Bitcoin was trading for between $11,500 and $12,000. It is just $500 from the local top that precipitated the recent 20% retracement.

The report notes that August also saw Bitcoin's correlation with the gold rush into a new all-time high of 0.97. This was before sharply falling back to 0.25. Bitcoin produced a high correlation with the S&P 500 throughout most of August. After posting a local top of 0.84, the correlation between BTC and the S&P 500 crashed down to minus 0.02. This suggested that Bitcoin may be breaking away from the meta-trend of the legacy markets.

The Federal Reserve Bank of St. Louis has previously stated that cryptos are entering global currency competition, that will increase their volatility. Recently, digital currency has seen a spike in volatility in markets around the world.

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