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Sell in May, and go away for the summer. This has been the advice in the traditional financial markets for decades. For whatever reason, typically prices begin to peak for the short term in May, and either steadily decline, or move sideways throughout the entire summer. In fact, if you were to just stop paying attention and take a break, you wouldn’t have missed much. There are many reasons for this, such as schools being out, and the weather being great. People like to use the summer to spend time outside, travel, and focus on family, putting financial markets on the back burner.
But what about Bitcoin? An asset that is supposed to be outside the traditional financial world. Is it a contrarian that marches to its own beat? Or, is it just like other financial assets; allowing you to go away for the summer?
In the years that followed the covid outbreak, one of the largest complaints about Bitcoin was how it was incredibly correlated to stocks and other financial markets. Newcomers to the Bitcoin market might be surprised to learn that wasn’t always the case. In fact, Bitcoin has been a contrarian for most of its life. When wars broke out, inflation increased, or worries about FED rates, Bitcoin price would always increase. After all, this is exactly what it was built for.
But as we now know, something changed after Covid. The world became panicked and wanted to find safety in dollars. But the real issue is that Bitcoin’s price began to rise, and the large Wall Street players finally began to enter the market. These investors treat each market the same. When there are fears about inflation, wars, or anything else; they will sell out of their positions into cash. This is why Bitcoin was incredibly correlated to other financial markets in the last two years.
That fact alone might have you believe that Bitcoin will act just like other financial markets this summer. Fulfilling the famous phrase of, “sell in May, and go away.” But, it is important to remember that this was only a small portion of Bitcoin’s history. In fact, over the last few months, BTC began to remind people just how much of a contrarian it can be. When banks started collapsing there was a rush into Bitcoin. Causing its price to rise from $15k to $31k.
However, soon after the price would dip back down to $25k, before being propelled back up to $31k due to BlackRock filing for a spot Bitcoin ETF. With that said, if you just ignore the BlackRock price surge, the truth is that the price of Bitcoin has been moving sideways for months.
Looking at the recent history of Bitcoin. Last year after the initial summer of insolvencies, prices moved sideways for nearly the entire summer until the FTX fraud bombshell. Going back to 2021, after ESG FUD, China banning Bitcoin and Tesla selling some of their coins, prices moved downward and sideways for the entire summer.
Moving back to the present day. There isn’t anything bullish immediately on Bitcoin’s horizon. The next halving isn’t until next year. It could be months until the spot ETF is approved. This means that if Bitcoin doesn’t have any major news or developments, it very well could do nothing for the rest of the summer.
But if there is one thing you need to remember; it is that Bitcoin loves to rebel. It loves doing exactly the opposite of what everyone is expecting. Whether that is the price going parabolic, doing nothing, or plummeting downwards. Never assume you will know what it will do.
How about you? Should you stay away from Bitcoin for the summer?
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