Markets are majorly driven by some important events, especially if retail investors are involved and some of those events are repetitive, which we call trends that which market keeps showing. If large data points are gathered, analyzed, studied well, and implemented well then it can be beneficial in the trading as well. In this article, we will look into one such trend that has been carried out since the beginning of Bitcoin trading. We will take stats from 2013 to the current date and will derive some of the conclusions as well as the risks involved in it. So, let's dive into it...!!
[Note: The purpose of this article is to share the information only and not financial advice. Take your own trading/investing decisions based on your own research, Happy Reading!!]
The Trend!
Now let's get started with understanding the trend. Here we will look into the pricing data of Bitcoin on a monthly basis from April 2013 till September 2023. And based on that we will see what could be the possible scenario for Bitcoin in the month of October.
Above is the monthly performance of Bitcoin. Soon we will be going into the month of October and as you can see in the above table, October is one of the best-performing months of Bitcoin. It has been dominated by the Bitcoin Bulls except in 2014 and 2018 (which are exceptionally bad months!) Bitcoin has performed very well. Considering the history, it might be possible to see the return of Bitcoin bulls in the month of October.
How October is the Best-Performing Month for Bitcoin?
You would say why October is the best performing month for Bitcoin,? as we can see much more returns in April and November historically. To answer this question, let's use some simple mathematics so it would be more clear. Below are the average as well as median returns for the three best-performing or looking to be best-performing months -
April
Average: +10.5% Median: +3.05%
October
Average: +21.8% Median: +21.5%
November
Average: +51.6% Median: +8.98%
Now as calculated above, we can clearly see that the April month is not as good as the other two in terms of both Average as well as Median returns. So, let's just consider October and November. Considering Average returns in October and November, November definitely surpassed the October returns, but considering Median values, October had better numbers than November.
Now, which parameter should be weighted more, average returns or median returns? You will get the answer to this question by answering my simple counter-question. Would you invest in shitcoins that show drastic price surges once a year or a steady, well-planned, and under continuous development project that shows small but steady growth? Well, the answer should be a steady project (many people still tend to invest in shitcoins!). So, similar to that, average returns show hyped or sudden growth whereas the median value shows steady and organic growth. So considering that perspective, October is a far better month for Bitcoin than November.
The Risks!
Now we have gone into the trend, what it is, and why October is the best month for Bitcoin. Now let's discuss some of the risks involved as well. If you are in the crypto space for enough time then you would have also noticed that there are plenty of government as well as institutional influence in the market which was not the case in earlier times. So any negative announcement or action by the government or any global financial institution might break the winning streak of October.
Another important risk factor that needs to be considered is from the Centralized exchanges, especially from the ongoing Binance US battle with the SEC. The result of the hearing of battles like this can also severely affect the performance of Bitcoin, it could be highly positive or highly negative as well. It is important to follow these types of battles between crypto industry-leading companies and the SEC.
We are getting good news that bankrupt crypto companies like Celsius Network and BlockFi are moving towards some resolution towards the creditors of the company but it is also important for the entire industry not to see such scams at such large scales.
Conclusion
We can find many trends or say events for which the crypto market reacts positively or negatively. However, it is important to consider the risks involved in implementing these events in our trading strategy so that we can manage those risks more effectively and be ready for the worst conditions.
Hope you guys find this short article informative! If yes, then do follow me on Publish0x as well as other social media channels for more crypto, finance, and fun but informative content!
Thanks for Your Time!
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