Seasonality
Predictable Behavior in Bitcoin's 4-Year Cycle
Before diving into seasonality, let’s better understand the cycles Bitcoin operates on. Among the various ways to measure cycles—like tracking from all-time-high to all-time-high or from a low to the subsequent peak—two stand out prominently:
The 4-Year Cycle
The Halving Cycle
Both of these are measured from when Bitcoin was launched on January 3rd, 2009. Notably, while the 4-Year Cycle follows human-time, akin to our conventional calendars, the Halving Cycle is dictated by Bitcoin's "block time."
The age-old adage "Sell in May and go away" hints at human behavior based on seasons. These seasonal traits are visible on the Bitcoin ledger. And just as traders often take breaks in summer, Bitcoin’s protocol has predictable behaviors based on the Halving, which occurs approximately every 4 years.
A Nuance in the Halving
While our seasonal behaviors are consistent on a cycle basis year-to-year, the Halving introduces slight shifts. The inconsistency between human time and Bitcoin’s major catalyst, the Halving, in block time, is essential for analysts to note, as it causes variations in the cycle. For this reason, all charts on the Bitcoin Strategy Platform are available in human time and block time, previously covered in this newsletter.
Seasonality
To better analyze seasonality, the following charts are specifically designed to accentuate the quarters of each year. As cyclical behavior happens on a 4-year basis, the orange vertical lines (indicated by the arrows) are today's date in the cycles 4 and 8 years ago, respectively.
In the chart below, we highlight the fourth quarter of each year. The orange vertical lines mark the month of September in previous cycles.
👆 Live chart available at the Bitcoin Strategy Platform.
Key Takeaways:
Note the shift in the position of the Halving.
Nonetheless, historically, Bitcoin's peak performance has been observed in Q4 of the second year.
Conversely, its lowest point is typically in Q4 of the third year.
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Now let’s highlight the current (third) quarter of each year. Again, the orange vertical line shows today’s date of the year leading the Halving.
👆 Live chart available at the Bitcoin Strategy Platform.
Note that the third quarter leading the Halving has historically seen negative price action.
For a more detailed analysis, these charts are available on the Bitcoin Strategy Platform. They can serve as invaluable tools for anyone seeking a deeper understanding of Bitcoin’s broader cycle patterns.
Today’s price action
In a recent newsletter, we discussed how Bitcoin’s price had breached the Short-Term Holder cost basis.