Historically, the summer months from June to September have brought significantly lower returns to investors compared to other months of the year. This time, this seasonal trend coincides with the price break below the key support level and the heightened risk of potential miner capitulation, given the reduction in block subsidy in the recent Bitcoin halving. Additionally, Bitcoin options are now signaling a potential slowdown for the summer.
(Source)
In traditional financial markets, research has long recognized seasonal trends in equity returns.
The saying “sell in May and go away” has been around since the nineteenth century, reflecting the tendency for the summer months to yield significantly lower returns compared to other times of the year, says André Dragosch, head of research at ETC Group.
Similarly, Bitcoin exhibits weaker performance from June to September, with data suggesting that avoiding Bitcoin investments in August and September could yield four times the returns of a year-round buy-and-hold strategy.
According to André Dragosch, statistically significant time-dependent performance patterns can be observed across almost any time frame: quarterly, monthly, weekly, daily, hourly, etc. A detailed explanation of this phenomenon can be found in this Coindesk article.
Meanwhile, with BTC falling below key support, traders have mostly set target price levels of nearly $50k, and along with that, miner capitulation risk looms heavy, as Joe Consorti noted in his recent post.
Miners had a brief reprieve following the halving, thanks to a surge in Bitcoin’s price and increased fees associated with Runes. However, their profits have since been significantly squeezed when the spot BTC price moved against them.
If the price decline extends further than a few days or weeks, miners may be forced to shut down their operations, cut off underprofitable machines, and sell much larger chunks of Bitcoin to maintain their business.
Hashprice, miner revenue per unit of computing power per day, is at its lowest. It hit $46.55/PH/Day, down 74% from its post-halving peak. (Source)
Finally, Bitcoin options positioning anticipates a summer slowdown in market activity, with Bitcoin implied volatility has dropped significantly since mid-April, as Bitfinex Head of Derivatives Jag Kooner told The Block:
Source: The Block's Data Dashboard
"Summers are usually low volatility periods, and traders are starting to position accordingly based on their bias." (Jag Kooner, The Block)
At the same time, when zooming out and comparing the current bull market with previous cycles, either this will be Bitcoin’s smallest bull market and its second-shortest, or there is still plenty of room to run.
So, one better not forget to zoom out, chill out, and consider the broader context for every market move before hastily smashing the sell button.
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