Sell in May and Go Away? Not in Crypto…

By | May 28, 2023

This is a spreadsheet of Bitcoin monthly aggregate historical returns, from late 2014 to 2023:

Over the last eight years, the first quarter has traditionally been the most dangerous time to invest in Bitcoin, with two of the months (January and March) showing a negative return, but then February is such a great month that it saves the quarter.

The last quarter of the year is usually fabulous, with all three months showing an aggregate positive return and October is the best month of the year.

So what are we to make of spring and summer? It’s a mixed bag.

May is usually very good, and July is excellent for reasons I can’t explain.

June was also a very good month showing nice returns, except for June 2022 when Bitcoin dived 38% upon news of the Terra-Luna fiasco.

Then you have August where nothing happens, and September can always be counted on to be consistently bad.

I always sell off in mid to late August and buy back in the third week of September. I’ve doing that for four years and never had cause for regret.

How Was the Trend the Last Eight Months?

It was completely opposite to what you would expect:

eptember 2022 was bad, as you would expect.

But October, almost always a great month, was up only 5%. Both November and December were down, that’s only happened once before, in 2019.

January is usually a horrible month, but in 2023, it returned 40%, the best month ever since 2013.

What happened?

Well, as we all trying to painfully forget, the year 2022 was nothing but a string of disasters for crypto.

We had the previously-mentioned Terra Luna debacle, followed by the bankruptcy of Voyageur Digital, Celsius, and many others, and finally the collapse of the FTX exchange.

No wonder the price action of Bitcoin deviated so widely from the historical trend.

What to Expect from the Rest of 2023

I am thinking eventually bitcoin will revert to historical patterns. The summer should be okay, maybe even very good. But I plan to sell off in late August and buy back in 30 days.

Since mid-2017, I have survived TWO price corrections of more than 80% and I’ve lost count of the number of times that bitcoin has corrected 30% or more.

However, from May 2017 to today, bitcoin has gone from $1,348 to $28,650.

Investing in crypto is risky for sure, but in the long run, divesting yourself of crypto and trying to time the market is a far riskier strategy.