“Sell in May and go away” applies to Bitcoin, too.
We applied that well-worn Wall Street cliché to the stock market a few weeks ago. Back then, we suggested traders might not want to wait until May to hit the “sell” button.
With the S&P 500 trading at over 5200 at the time, it made sense to take some chips off the table in April, before we entered the traditional worst six months of the year.
We can argue the same for Bitcoin.
The King of Cryptocurrencies hasn’t been around long enough to establish strong seasonal tendencies. But, if the past three years are any indication, Bitcoin might be headed for some turbulence this summer.
Take a look at this chart…
The price of Bitcoin peaked in April 2021 at just over $60,000. Four months later, it traded closer to $30,000.
In April 2022, the King of Crypto hit $47,000. It was down to $17,000 by October.
And, last year, Bitcoin traded above $30,000 in April. It then declined below $25,000 by September.
It sure seems as though “Sell in May and go away” is a good trading philosophy for Bitcoin as well as for the stock market.
Of course, that’s not always the case. If we go back several years, we can certainly find times when Bitcoin rallied during the summer. In fact, Bitcoin nearly doubled in value during the COVID summer of 2020. But, that was following a rather sharp decline in the asset during the previous six months.
Indeed, it appears that Bitcoin typically only rallies during the summer if the previous few months were bearish.
That’s not the case this year. Bitcoin was trading near $25,000 per coin last October. It closed above $63,000 on Friday. That’s better than a 150% gain in just over six months.
But, if history is any sort of a guide, the King of Crypto might be set to give a lot of that back over the next few months. So, just as we suggested with the stock market a few weeks ago, Bitcoin traders might do well to hit the sell button while we’re still in April.
Best regards and good trading,
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Jeff Clark
Editor, Market Minute
Source: Jeff Clark Trader