Veteran commodity traders are well aware of the prominent seasonal cycles. They’ve been identified for decades upon decades. In the stock market, as well, there are clearly identifiable seasonal cycles that exert pressure on prices, both up and down, depending upon the time of year. Stock market cliches such as “Sell in May and go away” have their foundations built upon cycles that repeat over time.
The reasons for the existence of these cycles have been debated for almost as long as the cycles themselves have been recognized. Some of the factors that cause cycles to exist are quite basic, such as increased demand for heating oil and natural gas to heat homes in the winter. Demand goes up significantly and exerts strong upward pressure on prices.
Other factors that contribute to seasonal cycles can be extremely complex and obscure.
Bitcoin Seasonal Cycle
It is into the complex and obscure category that the reasons for a seasonal Bitcoin cycle should be filed. We will save the speculation for why there is a seasonal cycle in Bitcoin for another time, and for now simply focus on the details of the cycle and what it might mean for Bitcoin and cryptocurrency prices later this year.
We are not the only ones who have taken notice of the Bitcoin seasonal cycle. Bitcoinira.com states, “One interesting observation is that just like agri-commodities, Bitcoin prices have been following seasonality in terms of their half yearly patterns.” Seasonax.com states that the Bitcoin price, “exhibits extremely conspicuous statistical anomalies.”
Yeah, that’s one way to put it.
In short, the 4th quarter of the year is by far the strongest period for price gains in Bitcoin. It certainly is a “statistical anomaly.” Here is a chart showing the average monthly gain since January of 2015:
Let’s look at charts of the Bitcoin price for the second half of the year for each of the past three years. Here’s 2015:
And here is 2016:
And here is last year, 2017:
Please take notice that for each of the past three years from a mid-month low in September, a very strong rally commenced leading to significantly higher prices before the end of December.
Here are the specific details:
Bitcoin price on September 16, 2015: $228.99
Bitcoin price on December 18, 2015: $463.52
Percentage gain for the period: 102%
Bitcoin price on September 21, 2016: $597.43
Bitcoin price on December 28, 2016: $981.70
Percentage gain for the period: 64%
Bitcoin price on September 14, 2017: $3,238.10
Bitcoin price on December 16, 2017: $19,187.00
Percentage gain for the period: 493%
Now, before you get too excited, remember, as the saying goes, “past performance does not guarantee future results.” With that being said, the seasonal cycle is evident. But it is not 100% guaranteed.
In 2014, the Bitcoin price was in a strong bear market and the entire year pretty much saw declining prices. During that time, there was no 4th quarter rally. Prices fell slightly during the 4th quarter. However, it could be argued that prices would have fallen even further without the support of the seasonal cycle. But this certainly cannot be proven.
Will this seasonal cycle propel Bitcoin and cryptocurrencies to new all-time highs before December of this year has passed?
It certainly could. The fundamentals have never looked better. Read through the many reports on this site and it becomes obvious that the entire sector is getting ready for tremendous growth and mainstream adoption.
However, at the moment the charts look excessively bearish.
Which reminds us of another cliche: “It’s always darkest before the dawn.”