Everyone knows the old saying “sell in May and go away” when it comes to stock market seasonality.
Let me share a few truths with you.
That last one may throw investors for a loop, but it’s true.
Bitcoin (BTC) follows many of the same seasonal trade winds that stocks follow, and it makes perfect sense.
Over the last ten years we’ve seen bitcoin mature as a security.
That maturity has allowed Bitcoin to “act” more like a stock rather than some rogue underground security. Because of that, the price trends in Bitcoin have developed seasonal patterns. Patterns that all investors need to keep an eye on.
Here are the seasonal trends for Bitcoin.
August and September see the lowest “win” rate for Bitcoin as both months finish lower 70% of the time.
As for returns, the month of August doesn’t “punish” investors as the average return for the month is -0.7%. The same can’t be said of September. Bitcoin averages a return of -6% for the month of September, making it the worst month of the year to hold the cryptocurrency.
This year we may have another factor to consider.
The SEC is expected to announce the approval of Spot Ethereum exchange traded funds any day now.
In January, the SEC’s approval of a Spot Bitcoin ETF sparked widespread buying that carried the crypto to its new all-time highs.
We may see similar buying in Ethereum – and Bitcoin in sympathy – however that would likely set the crypto market up for a “sell the news” August reaction.
The Price charts for Bitcoin and Ethereum tell investors that they should wait for an improvement in the trends.
Both Bitcoin and Ethereum are trading just below their respective 200-day moving averages. Those trendlines recently turned into overhead resistance for both cryptos.
Bitcoin’s recent move lower moved it below its May lows, extending a bearish pattern of lower lows and lower highs (noted in the chart with red arrows).
Bitcoin’s 50-day moving average is also in a bearish trend. This, combined with the current pattern suggests that August and September may be especially rough for investors.
Where Does Bitcoin Go from Here?
Investors should expect that bitcoin is ready to revisit the $50,000 price level. This will be a psychologically significant price given its round-number quality. Note that this is where Bitcoin ran into resistance during its rally higher in March.
Not so coincidentally, Bitcoin dropped roughly 15% in August of 2023, a move to $50,000 from today’s price would represent a 14% drop.
Bitcoin turns into an attractive buy at $50,000 for long-term investors looking for an entry.
We may see some volatility and prices below that support level, however the long-term trend for Bitcoin remains bullish with even more support for the cryptocurrency at $40,000 and $45,000.
