“Sell In May And Go Away”: Bitcoin’s Seasonality Kicks Off, As Rates Remain Unchanged

Key Points

• Bitcoin entered the month of May below $57k, ahead of a slight reversal.
• The Fed left the rates unchanged amidst investors’ high interest in the decision.

Bitcoin’s price dropped to its lowest levels in more than two months, as May kicked off. The digital asset dipped to a little above $56,500, ahead of making a comeback above the level of $57k.

At the moment of writing this article, BTC is now trading above $58k, up by under 1% in the past 24 hours on CoinMarketCap.

The Federal Reserve’s interest rate decision attracted investors’ attention

Investors have been focused on the latest decision regarding the interest rate. The Federal Reserve decided to leave the rate uncut following a meeting on Wednesday afternoon.

As CNBC notes, the central bank has kept its benchmark short-term borrowing rate the same, just as expected.

The federal funds rate has been in a targeted range between 5.25% and 5.50% since back in July 2023.

Standard Chartered’s head of digital asset research, Geoff Kendrick, said in a recent note that the broader macro backdrop has deteriorated for assets such as crypto that are thriving on liquidity. Broader liquidity measures in the US have reportedly rapidly deteriorated since mid-April, he continued.

He brought up Bitcoin ETFs which are Bitcoin’s current price catalysts at the moment. The coin’s retreat from March all-time highs has intensified during the past week, amidst broader risk-off sentiment, he noted.

CNBC also quoted Zach Pandl, head of research at Grayscale Investments, who said that higher real interest rates have likely supported the dollar and weighed on Bitcoin in April. The FOMC statement expressed concern about the inflation, he said, but it did not take rate cuts off the table.

He continued and highlighted that an expectation of future rate cuts would support Bitcoin’s price and the crypto markets in general.

How reliable is “Sell in May and go away” in 2024?

It’s safe to say that “sell in May and go away” seems to have applied to Bitcoin at the beginning of this month.

Taking a look at Bitcoin’s average monthly returns reveals the fact that the summer months between June and September have also shown significantly lower below-average returns.

This is a well-known saying in the finance industry, and it’s based on stocks’ historical underperformance during the six-month period from May to October.

This historical pattern has been popularized by the Stock Trader’s Almanac, which found investing in stocks as represented by the Dow Jones Industrial Average from November to April and switching into fixed income the other six months would have managed to produce reliable returns with reduced risks since 1950.

The only drawback of historical patterns is the fact that they do not reliability predict the future, as Investopedia notes. This is usually true for popular historical patterns.

If enough people were to become convinced that the “Sell in May and go away” pattern is here to stay, it would eventually end up going away.

Early-bird sellers would all try to sell in April, and they would bid against each other to buy their stocks ahead of the significant pack in October.

The seasonal tendency’s averages conceal important fluctuations from year to year, but the influence of seasonality is swamped by various other considerations.

Just like we cannot 100% rely on the previous halving events in order to predict the price for Bitcoin in the upcoming months, we can’t know for sure what happens next due to the “Sell in May and go away” pattern which doesn’t seem to be as useful as it once was, as The Wall Street Journal notes.

On the other hand, Bitcoin’s average seasonal performance pattern suggests that the coin could continue to rally over the next weeks until June, when BTC could make a pause during the summer months before continuing its surge towards the end of the year.

The Bitcoin ecosystem welcomed the ETF products and the Runes Protocol in 2024, new factors that will definitely have a say in the coin’s price path forward.