09. Oct 2019
When I heard about Bitcoin for the first time in May 2011, it was trading at 8 US dollars. Today, more than eight years later, it trades at around 8,000 dollars. A thousandfold increase!
Had I invested 1,000 dollars at the time, I would have made more than a million – a dream result! However, even an exceptional asset such as Bitcoin has its ups and downs – inter alia in terms of its seasonal patterns. And an exceptional seasonal trend lies directly ahead.
Let us take a close look at the seasonal pattern of Bitcoin.
The chart below shows the typical price pattern of Bitcoin in the course of a calendar year. The horizontal axis denotes the time of the year, the vertical axis the level of the seasonal index.
Bitcoin, seasonal pattern calculated over 9 years
A seasonal rally begins on October 11. Source: Seasonax
As the chart shows, there is typically an autumn rally in Bitcoin, similar to the one in the stock market. It begins on October 11 and ends on January 05 of the next year.
The average price gain achieved between October 11 and January 05 amounted to 78.83 percent. Due to compounding effects this is equivalent to an extremely large annualized gain of 1,080.82 percent.
Bitcoin Rallied in 7 out of 9 Cases
What happened in individual years? The following barchart shows the return generated by Bitcoin between October 11 and January 05 in every year since 2010. Blue bars show years in which positive returns were achieved, red bars show the years that generated negative returns.
Bitcoin, return in percent between October 11 and January 05 in individual years since 2010
Gains of up to 600%! Source: Seasonax
Blue bars obviously predominate. On three occasions price gains of more than 200% were achieved in this strong seasonal phase of just 86 days. One one occasion - from October 11, 2013 to January 05, 2014 - a gain of legendary proportions was recorded. Bitcoin advanced by 624.30%!
Please note: I personally nevertheless refrain from buying Bitcoin. I also do not consider Bitcoin to be money, based on monetary theory considerations, as it is neither a commodity nor circulation credit. I rather regard Bitcoin as a kind of lottery ticket in a pyramid scheme. You are of course welcome to hold a different opinion, but I felt it necessary to take this opportunity to inform readers of my stance.
Take a Look at the Seasonal Patterns of Other Instruments as well!
Regardless of this, there are fortunately thousands of other tradable instruments, such as indexes, commodities, bonds, currencies and other so-called cryptocurrencies, all of which you can quickly examine with respect to their seasonality thanks to Seasonax. You can either make use of the web-based app at app.seasonax.com or the Seasonaxapp at Bloomberg and Refinitiv/Thomsom Reuters Eikon – trials for testing the app are available as well!