- Sell in May and go away is a popular stock market adage that pays tribute to the traditional downturn in fortunes this month, but does it equate to crypto as well?
- Last year, BTC dipped by over 35 percent, but in the two years prior, it had recorded notable rises, so which way is crypto headed this way?
If you’ve been investing for a while, then you have most certainly heard of the saying “Sell in May and go away.” This stock market adage is almost as popular as the Santa Claus rally effect in December and whether it’s a sound investment strategy or not, investors still pay attention to date. But when it comes to crypto, does this adage hold, or is this bold new market anything goes?
Over the past decade, May hasn’t exactly been the month to get into the stock market for big yields. Data shows that since 2012, the biggest rise that the S&P 500 has seen in May is 4.53 percent in 2020. This was twice the next best record of 2.16 percent in 2018. In 2012, it was down 6.27 percent while in 2019 it dipped by a similar percentage.
Bitcoin has a much more different history. Since 2012, it has seen rises in 6 of the 10 years. The highest was in 2017 when it shot up by 52 percent after which it went on to set a then-record high at $20,000. In 2019, it shot up by 52 percent once again as it recovered from the brutal bear market of 2018. In 2014 it was up 41 percent while in 2020 and 2016 it was up 9.4 and 18.5 percent respectively.
The top crypto has also seen some brutal May months, the worst of which was last year when it dipped 35.2 percent. In 2018 it was down 18.9 percent in that year’s bear market when the market was in a correction phase after a stellar 2017.
So which way will Bitcoin head this month? Analysts believe that the May curse doesn’t apply to crypto. Historical data shows that May is the third-best month for crypto returns after November and April.
Hitesh Malviya, the founder of IBC Capital told the Indian newspaper Mint:
If we follow the historical performance, then bitcoin and other top cryptocurrencies have performed quite well in May. So we can invalidate the saying “Sell in May” in this case. Also, the price movement in the crypto market depends on the market cycles and sentiment.
Despite this positive history, Malviya is cautious about Bitcoin this month. He noted that the technical charts show that it could be a bearish month for the top crypto.
Technically, bitcoin has closed below the 21-monthly average on the monthly time frame, which is bearish. We might expect a retest of the $20,000 level in the next couple of months if market conditions remain bearish due to the global economic crisis.