maartunn2023-05-01

"Sell In May And Go Away" - TRUE OR FALSE?

"Sell in May and go away" is a well-known adage in the world of finance that suggests that investors should sell their assets in May and move to cash or other less risky assets for the summer months. This strategy is best known for stocks, but... Does it also work on Bitcoin? Let's take a look at the history of Bitcoin and investigate whether this principle also applies to Bitcoin. In the chart below, I've attached every candle of the month May over the last 12 years of Bitcoin's history. Seven out of twelve candles are green and only five are colors with red. This suggests that the principle doesn't work for Bitcoin directly, but it's worth noticing that: 1) The size of green candles appears to be diminishing, indicating a potential decline in Bitcoin's maximum gains. 2) During the last two years, both candles have been red, suggesting a significant sell-off occurred in the month of May. Whether we see a green or red monthly candle, history does not show a clear pattern for Bitcoin, and the principle does not seem to apply very strongly to our lovely orange coin. Last nuance: In the original principle, not only May is taken into consideration, but it is assumed to sell in May and buy again after the summer, for example in November. Further research into that strategy will be for a later moment, this analysis only focuses on the month of May