Seasonality plays a big roll in traditional investments and likely plays a role in bitcoin returns as well

We all know about the halving price cycles by now, but there also appears to be some seasonality to bitcoin trading.

For this reason it may be beneficial to pay attention to monthly returns to get an idea what time of year bitcoin "normally" does well.

Lets dive in...

Here's a month by math breakdown of bitcoin returns going back to 2011:

(Source: https://twitter.com/krakenfx/status/1293231782725406721/photo/1)

Interestingly enough, July had been bitcoin's 3rd worst performing month on average before we included the data from this year.

The incredible 24% returns during the normally weak month propelled the month of July up the list significantly in terms of monthly returns.

Some thoughts...

As you can probably see from looking at the above chart, the months of August and September offer some of the worst returns for bitcoin historically.

Both in terms of average returns and median returns they rank as some of the worst months there is.

This has contributed (as well as a weak July traditionally) to the 3rd quarter usually being the worst quarter historically for bitcoin returns.

Also one thing to note is that it probably makes more sense to pay attention to the median returns instead of the average returns due to a couple huge moves really skewing the data.

For example the 451% gain back in November of 2012 really skews the average gains when every other November return has been much more subdued.

All that being said, this 3rd quarter may not be as weak as history would suggest, and here's why...

First of all we probably have the best macro backdrop that we could have ever hoped for due to the massive central bank money printing that is ongoing at unprecedented levels.

This is causing a weakening dollar which has always been music to bitcoin's ears.

However, apart from the macro backdrop, this time may play out slightly different due to the halving.

The last halving (before the most recent one) was July of 2016.

The most recent one was May of this year.

Which means we are currently roughly 3 months removed from the halving.

If we back to 2016 and look at 3 months post halving, we get to October of 2016, a month that returned 14% and if we go back to the halving in November of 212 and go 3 months out, we get to February of 2013, a month that saw 63% returns.

So, while August has historically been weak for bitcoin, we are also 3 months post halving which has historically been very strong.

In this case I think the halving patterns override the seasonality patterns, which means we probably won't be seeing a weak 3rd quarter this year.

Stay informed my friends.

-Doc