Bitcoin (BTC) enthusiasts have reasons to be optimistic this month. Historical data and seasonal cycles suggest that the largest cryptocurrency may see a price boost following months of declines and rangebound trading.
Recent Trading Trends
BTC has fluctuated between $59,000 and $74,000 since April. This volatility is due to billions in sales, impending selling pressure, outflows from exchange-traded funds (ETFs), and negative sentiment among retail traders. However, a historically bullish July could change this trend.
On the first day of July, U.S.-listed ETFs saw inflows of nearly $130 million, their highest since early June, following over $900 million in outflows during June.
Historical Performance
Singapore-based QCP Capital highlighted in a recent Telegram broadcast, “Bitcoin has a median return of 9.6% in July and tends to bounce back strongly, especially after a negative June (-9.85%).” They also noted that their options desk observed positioning for an upside move, likely anticipating the ETH spot ETF launch. Many indicators suggest a bullish July.
Over the past decade, Bitcoin has averaged gains of more than 11% in July, with positive returns in 7 out of 10 months. Crypto fund Matrixport reported that July returns from 2019 to 2022 were around 27%, 20%, and 24%, respectively.
Understanding Seasonality
Seasonality refers to the predictable changes in asset prices that occur every calendar year. While these patterns might seem random, they often stem from factors like profit-taking around tax season in April and May, leading to drawdowns, or the generally bullish “Santa Claus” rally in December, indicating increased demand.
