Sell in May Wall Street Adage Doesnt Apply to Bitcoin, Data Suggests

Tuesday 9 June 2020, 9:31 AM AEST - 1 month ago

trading_floor_at_the_merchants_exchange_third_and_chestnut_streetsTrading Floor at the Merchant's Exchange, Third and Chestnut Streets (via Wiki commons).

The old Wall Street maxim sell in May and go away is detrimental to bitcoin investors, market data from Messari suggests.

The largest cryptocurrency generated positive returns during eight of the past 10 Mays, outperforming its monthly average for that year during six of them.

Sell in May refers to an old investment strategy that advises against holding investments during summer months, starting in May. While there may be truth to the adage for traditional markets, some bitcoin investors dont give the idea much credence.

Its just a meme to me, said Qiao Wang, a cryptocurrency startup investor and former quantitative trader at Tower Research.

In May of last year, for example, bitcoins price gained more than 54% while the 2019 monthly average return was less than 8%. Bitcoin climbed almost 9% last month, just above the year-to-date monthly average of roughly 8.5%.

sell-in-mayHistorical monthly bitcoin returns

It seems clear to me that you want to buy in May and go away, Wang said of bitcoin.

During bearish cycles in 2015 and 2018, bitcoin performed worse in May than the years monthly average. But in 2011, during the cryptocurrencys first bearish cycle, May returns outshined the years monthly average by 120 percentage points.

Nonetheless, market sayings like Sell in May, while lacking supporting fundamentals, often become self-fulfilling or are just simply the results of happenstance, said Sam Trabucco, a quantitative cryptocurrency trader at Alameda Research.

Speaking to bitcoins historical outperformance in May, Trabucco said, I dont see a reason to believe this particular pattern is anything but variance.


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