What Does the Chinese New Year have in Store for Bitcoin Price this Time?
- On Jan. 25, people will celebrate the Chinese New Year that will go on for 15 days
- “Data indicates BTC does not underperform preceding the Chinese NY”, said economist and trader Alex Kruger
- About a week before the big day, BTC price jumps to $9,000
The year of the Rat is almost upon us!
This year, the Lunar New Year, also known as the Chinese New Year or the Spring Festival falls on Saturday, Jan. 25. It will be followed by 15 days of celebrations marking the transitions from the year of the Pig to the year of the Rat.
As the new year approaches, “Some think the Chinese New Year may impact BTC negatively, as people sell bitcoin to purchase presents,” observes economist and trader Alex Kruger.
However, the data pains a completely different picture as Kruger notes, “Data indicates BTC does not underperform preceding the Chinese NY.”
The vast majority of the times preceding the Chinese New Year, Bitcoin returns have been positive. The best year was 2012 when BTC returns were positive throughout, as high as 16.4%.
Over the years the returns continued to decline but 2018, a bear market for cryptocurrencies, has been rather a good year with BTC returns as much as 4.2%, last seen in 2012 only.
The Chinese New Year that doesn’t have a set date as it starts with the 2nds new moon after the winter solstice produces negative returns for BTC only in the days preceding the week before it.
“Notable underperformance if looking at returns of the days preceding the week before New Year,” the trader notes.
For 2020, the daily average five days preceding NY-7 would represent the daily average return between Jan. 12 and Jan. 17, that is the ongoing week till today. However, bitcoin did the opposite and surged this week. We went from $8,000 on Jan. 12 to jumping the $9,000 threshold.
At the time of writing, BTC/USD has been trading at $8,933, as per Coincodex. Trading volume didn’t back the move initially but has started gaining momentum and currently stands at $1.14 billion.
Earlier this week, volume on top 10 exchanges with real volume reached $2 billion as per Messari. This time only $527 million worth of BTC exchanged hands.
Despite the move up, trader Majin remains bearish as he said, “Corn looks exhausted. it's time to rest boy.”
“The current upgrind action is the mirror image of 7.7 climax during downgrind,” deduces Majin.
Now as we approach Chinese New Year, it needs to be seen if we will finally touch $10,000 before next weekend or pullback after over 33% spike in less than a fortnight.