$BTC A market intelligence platform analyst from CryptoQuant has predicted that bitcoin (BTC) could experience the 'sell in May' effect in the coming months, even as the bullish cycle remains unbroken.
According to Oinonen's report, BTC is expected to have a sideways summer and experience high price levels in the last quarter of the year following the sell in May effect.
The Sell in May Effect
The sell in May effect is a concept that refers to the seasonality of traditional finance. The saying is based on the idea that stock market returns tend to be higher from November to April compared to May to October.
The investment strategy dates back centuries and suggests that stocks perform weaker from May to October; therefore, investors should sell their holdings around May and reinvest around October.
The adage has been around for centuries and postulates that the best six months of the year for stocks are recorded from November to April, suggesting that investors should sell in May and wait until October to buy again.
While this saying has largely been applied to the stock market, a 2024 report from cryptocurrency research firm K33 revealed that buying BTC in October and selling in April has accumulated cumulative returns of 1,449% between 2019 and 2023, while buying in May and selling in September has recorded a negative return of -29% during the same period.
Bitcoin Still Has More Potential
In line with the postulation of the sell in May effect, Oinonen insisted that BTC will see a price surge for the last quarter of the year. The market has witnessed a repetition of positive seasonality in Q4 in 2013, 2016, 2017, 2020, 2021, 2023, and 2024.
Additionally, the CryptoQuant analyst noted that BTC may not experience a deeper price correction for several months or even a year.
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