Should you “sell in May and go away?” Here’s what crypto experts say

Together bitcoin price struggling for speed and cryptocurrency industry Still navigating the effects of a brutal bear market, many investors and traders are wondering whether they should “sell in May and walk away.”

For a quick take, “selling in May” is a strategy based on the idea that the stock market has historically underperformed in the summer months, before rallying in November and toward the end of the year. Many crypto traders ask if this approach works in crypto.

Two experts from two major crypto exchanges: Gracie Chen, Managing Director bitgateand Robert Quartli-Janeiro, Chief Strategy Officer of bitruShare your insight.

Does the ‘Sell in May’ Strategy Work in Crypto?

The “Sell in May and go away” strategy is widely supported across a wide range of traditional asset classes, including sharesBonds and commodities, it has gained traction in the cryptocurrency market in recent years due to the sector’s growing popularity among investors and the potential for significant profits or losses.

Both Chen and Quartely-Janeiro agree that the ‘sell in may’ strategy is not a sure thing in crypto. Chen says the Web3 industry is constantly innovating, making it difficult to predict market performance. He explained why:

“Professional traders need to constantly follow the latest developments in the industry to stay ahead of the game. Web3 technology is constantly evolving, creating new trading opportunities that can be missed if not actively monitored.

Chen also points to the short-term perspective as another reason why the “sell in May and go away” approach may not work in crypto. To assess this, she suggests that investors compare the daily historical volatility of bitcoin and the Nasdaq (NDX). With BTC, the daily HV has historically fluctuated around 60, while the Nasdaq index has been around 25.

This means that the higher volatility of the cryptocurrency compared to the NDX comes with the potential for higher returns in terms of short-term trading profits. This is why experts believe that the “Sell in May” strategy may not be effective when it comes to the Web3 industry, said a BitGate exec.

Quarterly-Janeiro Says The “Sell in May and Go Away” Strategy Has No Effect in Crypto and “Lacks of Continuity.” He points to insights from exchange data on bitcoin’s historical performance as proof of this.

For example, in May 2019 bitcoin was trading at around $5,500. However, as traditional markets struggled over the summer, the BTC price rallied over 90% to over $10,000 by September.

The cryptocurrency was also received between May 2020 and October 2020. Of course, bitcoin fell 28% between May 2018 and September 2018 (from around $9,000 to around $3,800). However, it rose from $1,700 to nearly $8,000 between May and November 2017, highlighting the discrepancy.

Why do people believe in the ‘Sale in May’ strategy?

Chen says this is because the strategy has worked for many years in traditional markets. european And We Markets have seen weak performances during the summer in the past, with trading volumes down as investors and traders pack up for the holidays.

Quartli-Janeiro says the strategy may also appeal to investors who want to avoid the risk of market volatility during the summer months.

So they sell their stocks in May with the aim of reinvesting the profits in November, when the markets have historically displayed strong performance. The Bitrue CSO explained that factors influencing this behavior include seasonal fluctuations in consumer spending, corporate earningsand investor sentiment.

2022 was a brutal year for crypto. Does it change anything?

The events of 2022 will undoubtedly affect the crypto market, both Chen and Quartely-Janeiro say. Bankruptcies of LUNA, Three Arrows Capital and Voyager, Celsius and FTX (read what happened) Here) shook investor confidence. The cryptocurrency market lost more than $2 trillion in market capitalization amid a slide in price coupled with a slide in sentiment.

What does this mean for the market? Chen says that the negative impact of the turmoil has seen institutional investors pull out of crypto in a big way. Thus, the industry is likely to remain in a liquidity-stressed environment for some time. Chen said:

“Despite this, several financial giants have decided to expand their services in the cryptocurrency space, which could create a way for institutional funds to re-enter the crypto market, provided favorable macroeconomic conditions.”

According to Quartli-Janeiro, 2022 was a turbulent year for crypto, including several major hacks and market volatility.

What comments crypto may attract from the evening of 2022 and from across the market, he explained:

“First, it is clear that the crypto industry is not isolated from macroeconomic factors, such as interest rate increases by the Federal Reserve, which can have a significant impact on crypto markets. Second, excessive leverage can result in contagion, leading to A domino effect is created that affects many institutions and markets. Third, while decentralized finance (DeFi) has demonstrated resilience, ongoing economic and technical auditing is necessary to ensure the safety of customer funds and prevent smart contract breaches. Is.

In his opinion, the stability of crypto cannot rely solely on price speculation; There is a need to ensure that projects provide real-world utility and value.

Should You Sell or Hoddle?

Ultimately, it’s up to individual investors when it comes to the ‘sell in May and go away’ strategy, Chen and Quartely-Janeiro said. They recommend that it is probably best for investors to do their own research, taking the approach they believe is right for their investment goals.