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Bitcoin’s By Month: Is Redtember and Uptober For Real?
Oct. 01, 2024. 6 mins. read.
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Is Bitcoin's 'Redtember' myth real? Or does 'Uptober' offer hope? Werner explores the data behind these catchy crypto trends.
Bitcoin’s price movements have always been a subject of intense tea-leaf reading and speculation, and over the years, various trading adages have emerged, attempting to capture patterns in Bitcoin’s monthly performance. From wisdoms like “Sell in May and Go Away”, “Wake Me Up When September Ends”, to Redtember and Uptober, crypto investors are skeptical about certain months. Is this pure superstition?
Let’s dig into historical data to examine the validity of these popular sayings and provide insights into Bitcoin’s monthly price trends. Remember that historical performance is not equal to future performance.
Examining Bitcoin’s Monthly Returns
Let’s analyze the comprehensive table of Bitcoin’s monthly returns from 2013 to 2024.
Month-by-Month Breakdown
- January: New Year Here and Chinese New Year incoming
With an average return of 3.35%, January usually shows moderate growth. Notable years include 2013 with a 44% gain and 2015 with a -33.05% loss. Since 2020 we’ve seen more green, as institutions enter with quarterly budgets, looking to start allocating earlier on in the year.
- February: Usually quiet, but with outliers
Historically strong, February boasts the second-highest average return of 15.66%. The standout year was 2013, with an impressive 61.77% increase.
- March: Upwards
Another solid performer, March had an average 13.42% return from 2013-24. March of 2013 was exceptional, with a staggering 172.76% gain.
- April: Fools’ Gold?
Consistent growth was seen in April, averaging 12.98%. Both 2013 and 2019 saw gains exceeding 50%. Not so fast though: it dropped in April of this year.
- May: Go away!
While it has a positive mean return of 7.94%, May showed significant fluctuations over the years 2013 to 2024. Many crypto investors believe it’s the best time to temporarily pack your toys away and wait till Q4 before allocating again, hence the saying “Sell in May and Go Away”. In 2024, at least, they were right.
- June: The summer doldrums start
The first month with a negative mean return, although a small one of -0.35%.
- July: Fireworks
This one’s a surprise. As the summer holidays peak, there’s a surprising return to positive territory with a 7.56% average, showing steady but unspectacular performance.
- August: No-man’s land
Barely positive at a 1.75% mean return, August has historically been unremarkable.
- September: Redtember?
Notorious for negative performance, with a mean return of -4.92%. This month has earned the moniker “Redtember” in crypto circles. It’s usually a slow month, as the summer holidays hangover means everyone is slow to get to serious business in financial circles.
- October: Uptober
Aha, Uptober! The start of Q4 and the end of the year is coming into sight. Budget remainders can be allocated with greater freedom, and all systems are firing. October was historically surprisingly strong, with an average return of 22.90%, challenging the negative sentiment often associated with autumn months.
- November: The best month on average
The best-performing month on average, with an impressive 46.81% return. 2013 saw an extraordinary 449.35% gain.
- December: Holiday season bring mixed gifts
Closes the year with a respectable 5.45% average gain.
Evaluating Popular Trading Adages
Now, let’s examine some well-known trading sayings in the context of Bitcoin’s historical performance.
“Sell in May and Go Away”
This adage, borrowed from traditional stock markets, suggests divesting in May and reinvesting in November. For Bitcoin:
- May itself averages a 7.94% gain, contradicting the “sell” advice.
- The subsequent months show mixed results:
- June: Slightly negative (-0.35%)
- July: Positive (+7.56%)
- August: Marginally positive (+1.75%)
- September: Negative (-4.92%)
- October: Strongly positive (+22.90%)
The data indicates that strictly adhering to this adage for Bitcoin would have resulted in missed opportunities, particularly in July and October. However, it would also have avoided September’s typical downturn.
“Redtember”
September’s reputation for poor performance is well-supported by the data:
- Average return: -4.92%
- Median return: -6.04%
- Negative years: 9 out of 12
- Worst performances: 2014 (-19.01%), 2019 (-13.38%), 2020 (-7.51%)
While there have been exceptions (2015: +2.35%, 2016: +6.04%, 2023: +3.91%), the trend clearly leans negative, lending credibility to the “Redtember” moniker.
“Uptober”
October’s strong performance supports the “Uptober” nickname:
- Average return: 22.90%
- Median return: 27.70%
- Positive years: 8 out of 12
- Standout years: 2013 (+60.79%), 2017 (+47.81%), 2021 (+39.93%)
Despite some negative years (2014: -12.95%, 2018: -3.83%), October generally shows strong positive performance, validating the “Uptober” concept.
Broader Trends: Quarterly Analysis
Expanding our view to quarterly performance reveals interesting patterns:
- Q1 (Jan-Mar): Strongest quarter, averaging 56.47% returns.
- Q2 (Apr-Jun): Positive but cooler, with 26.89% average returns.
- Q3 (Jul-Sep): The weakest quarter, averaging just 4.95%.
- Q4 (Oct-Dec): Very strong, with an 88.84% average return.
These quarterly trends suggest a general pattern of strength in the latter part of the year and early months, with a lull during the summer. This lull in summer may be the meaning of ‘sell in May and go away’.
Bitcoin and Ethereum by Quarter
What is maybe a bit more clear in this historical data, is that Q2 and Q4 were opportune times for Bitcoin’s price to move, and Q3 was a time to HODL after the Q2 growth. Every year is different, and news like a recession, a Bitcoin spot ETF approval, or a halving event can have a dramatic effect on the price of all crypto assets.
Ethereum, on the other hand, has so far been a coin for all seasons. ETH’s Q2 performance has been incredible, with only two red blips in 2022 and 2024. This can be attributed to technological events like the Merge and specific upgrades like EIP-1559 and proto-danksharding.
Implications for Investors
While these patterns are intriguing, it’s crucial to approach them with caution:
- Historical Trends vs. Future Performance: Past patterns don’t guarantee future results. Two things known for their unpredictability are the cryptocurrency market and the future.
- Market Evolution: As the crypto market matures, it may behave differently to an earlier version of itself, and historical patterns may become irrelevant.
- External Factors: Global economic conditions, regulatory changes, and technological developments can override historical patterns.
- Volatility Considerations: Bitcoin’s high volatility means significant deviations from averages are common.
- Long-Term Perspective: Short-term trading based solely on monthly patterns can be risky. A long-term investment strategy might be more suitable for many investors.
Conclusion
The analysis of Bitcoin’s monthly performance reveals some consistent patterns, particularly the challenges of September and the strengths of October and November. However, it’s important to view these trends as part of a larger picture rather than definitive trading signals.
Things in Cryptoland are always green or red but rarely black and white. There’s a lot of nuance and macro-economic factors at play – or is it lunar horoscope influence?
Investors should consider multiple factors when making decisions:
- Conduct thorough research on market fundamentals.
- Stay informed about regulatory developments and technological advancements.
- Consider the broader economic context.
- Diversify investments to manage risk.
- Align trading or investing strategies with personal financial goals and risk tolerance.
While historical data are interesting, the cryptocurrency market’s dynamic nature means that adaptability and comprehensive analysis remain key to navigating this exciting but volatile space.
Therefore, you have two options: zoom out completely to an annual view, or take it day by day.
Oh, and of course invest in projects that you’ve properly researched and believe in!
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