Bitcoin – An Exceptional Asset

When I first heard about Bitcoin (BTC) in May 2011, it was trading at 8 US dollars. Today, more than eight years later, BTC trades at around 8,000 dollars. A thousandfold increase! An investment of 1,000 dollars at the time would have resulted in a gain of more than a million  –  a dream result.

 

Bitcoin went from 10,000 BTC for a pizza to around 100 BTC for a Lambo in what appeared to be an unseemly hurry… [PT]

 

However, even an exceptional asset such as Bitcoin has its ups and downs – inter alia in terms of its seasonal patterns. And an exceptional seasonal trend lies directly ahead.

 

The Precise Annual Seasonal Pattern of Bitcoin

Let us take a close look at the seasonal pattern of Bitcoin.

The chart below shows the typical price pattern of Bitcoin in the course of a calendar year. The horizontal axis denotes the time of the year, the vertical axis the level of the seasonal index.

 

Bitcoin, annual seasonal pattern calculated over 9 years.  A strong seasonal rally begins on October 11

As the chart shows, there is typically an autumn rally in Bitcoin, similar to the one in the stock market. It begins on October 11 and ends on January 05 of the next year.

 

Optimal Seasonal Timing in Bitcoin

The average price gain achieved between October 11 and January 05 amounted to 78.83 percent. This is equivalent to an extremely large annualized gain of 1,080.82 percent.

 

Bitcoin Rallied in 7 out of 9 Cases

What happened in individual years? The following bar chart shows the return generated by Bitcoin between October 11 and January 05 in every year since 2010.  Blue bars show years in which positive returns were achieved, red bars show years that generated negative returns.

 

Bitcoin, return in percent between October 11 and January 05 in individual years since 2010.  Gains of up to 600% have been seen.

 

Blue bars obviously predominate. In this strong seasonal phase of just 86 days price gains of more than 200% were achieved on three occasions. One one these occasions – between October 11 2013 and January 05 2014 – a gain of legendary proportions was recorded. Bitcoin advanced by 624.30%!

Please note: nevertheless, I personally refrain from buying Bitcoin. I also do not consider Bitcoin to be money as defined by monetary theory,  as it is neither a commodity nor circulation credit. I rather regard Bitcoin as a kind of lottery ticket in a pyramid scheme. You are of course welcome to hold a different opinion, but I felt I should take this opportunity to inform readers of my stance.

 

BTC weekly since 2014 – also for the record: our view of Bitcoin is somewhat more benign than Dimitri’s – in fact, we do believe it has all the characteristics of money, even though it is not a generally accepted medium of exchange at the current juncture (as we have previously discussed, we consider it to be a secondary medium of exchange). [PT]

 

Check Out Seasonal Patterns of Other Instruments as well!

Regardless of this, there are thousands of other tradable instruments, such as indexes, commodities, bonds, currencies and other cryptocurrencies, all of which you can quickly examine with respect to their seasonality thanks to Seasonax. You can either make use of the web-based app at www.app.seasonax.com or the Seasonax app at Bloomberg and Refinitiv/Thomsom Reuters Eikon – trials for testing the app are also available.

PS: Seasonal patterns can help you as well!

 

Dimitri Speck specializes in pattern recognition and trading systems development. He is the founder of Seasonax, the company which created the Seasonax app for the Bloomberg and Thomson-Reuters systems. He also publishes the website www.SeasonalCharts.com , which features selected seasonal charts for interested investors free of charge. In his book The Gold Cartel (published by Palgrave Macmillan), Dimitri provides a unique perspective on the history of gold price manipulation, government intervention in markets and the vast credit excesses of recent decades. His ground-breaking work on intraday patterns in gold prices was inter alia used by financial supervisors to gather evidence on the manipulation of the now defunct gold and silver fix in London. His Stay-C commodities trading strategy won several awards in Europe; it was the best-performing quantitative commodities fund ever listed on a German exchange. You can find an introduction to the Seasonax app and in-depth information on what it can do here. Furthermore, here is a complementary page on the web-based Seasonax app, which costs less and offers slightly different functionality (note: subscriptions through Acting Man qualify for special discounts – for both the Bloomberg/Reuters and the web-based versions of the app. Details are available on request – simply send a note to info@acting-man.com with the header Seasonax!).

 

Charts by Seasonax, cryptowat.ch

 

Editing, chart & image captions (where indicated) by PT

 

 

 

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Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

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