Like equities and other investments, the performance of cryptocurrencies also changes from quarter to quarter, influenced by different events that take place in the quarter.…
Like equities and other investments, the performance of cryptocurrencies also changes from quarter to quarter, influenced by different events that take place in the quarter. An analysis by Skew Markets has revealed the top performing and the worst performing quarters in the last 6 years.
As per Skew Markets’ analysis, Q2 has seen the positive Bitcoin quarterly returns from 2014 to 2019, except for 2018. The worst performing quarter has been Q1 in these years, except for 2017, and 2019, when Bitcoin price showed growth of 11.21% and 10.34% respectively.
Q2, on the other hand, has shown marked growth in Bitcoin price, except for in 2018, when the majority of the year was characterised by bearishness after the crypto boom of 2017 as the market tumbled from its all-time high. In 2017, the year of Ethereum-based ICOs, Bitcoin price grew from $1,000 to nearly $3,000, recording a whopping 131.47% gain in Q2. The success of the quarter repeated itself in 2019, when Bitcoin price, from $4,000 level at the beginning of quarter, peaked to nearly $14,000 at the end of the quarter.
Q4 has also shown good performance. In 2015, 2016 and 2017, Bitcoin’s quarterly gains were 82.40%, 58.06%, and 226.28% respectively.
Earlier in October, crypto economist and partner and Adaptive Fund, Willy Woo, had also commented on Bitcoin price’s seasonality.
Skew Market’s findings are in sync with Willy Woo’s comment on Bitcoin’s seasonality where he points out that May is the strongest month for Bitcoin price and March is the weakest.
The best way to explain why Q2 is the most profitable would be the Reverse “Sell in May and Go Away” trend. A blog by delta exchange explains that the value of US equities usually declines at this time as US investors and traders close their positions before the beginning of the summer holidays. The trend works in reverse when we talk about Bitcoin.
From the chart, it is evident that the reverse “Sell in May, Goa away” trend has worked for Bitcoin during most of the years, except for 2015 and 2018 when Bitcoin price fell. 2017 and 2019 saw record gains as Bitcoin price increased by 60.83% and 58.71% respectively. It is likely that investors, at this time, flock to Bitcoin because of the suppressed prices of equities due to the selling.
On the other hand, Q1 is likely to have seen mostly negative Bitcoin returns because of two main factors – the reverse January effect and the tax effect.
In January, US equity stock markets are abnormally high due to the New Year and Holiday effect. At this time, Bitcoin has been observed to experience a reverse January effect with suppressed prices. The bearishness of the market may be attributed to the increased attention that the US equity stock markets receive at this time.
From 2014 to 2019, 2014 was the only year when Bitcoin had a positive price movement in January. During the remaining years, Bitcoin price plunged between 3% to 30%.
Then in March comes the tax effect. In March, many investors liquidate their Bitcoin holdings to pay taxes.
As a result of the tax effect, only 2019 saw positive Bitcoin price movement. From 2014 to 2018, Bitcoin price has been in the red in the month of March.
The holiday season is almost here and now it is time for the Santa Claus rally. Bitcoin price rose consecutively for 3 consecutive years from 2015 to 2017. Now, it remains to be seen if the Santa Claus rally will take place this year or not.
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