Why is now the prime time to buy Bitcoin? Bitcoin’s Bright Season

Prime Time To Buy Bitcoin? Bitcoin prices and trading in general had a rough year, but they have been slowly getting better. The most well-known cryptocurrency’s price has gone up from $16,625 in January to over $34,000 in October, a rise of about 30% in just the last month. And now we’re entering a time when Bitcoin seems to have done the best in its history.

The value of the cryptocurrency has often gone up a lot in the last three months of the year, which suggests that bitcoin prices follow a yearly pattern. In 2016, bitcoin went up 63% from the beginning of October to the end of December. In 2017, it went up 267% in the same amount of time. Investing study firm Bespoke Investing Group says that crypto has gained an average of 25% in October, 8% in November, and 11% in December from 2016 to 2021.

There is a lot of hope among buyers that Bitcoin can keep going up. But it’s impossible to know for sure where risky investments like crypto are going at any given time, and some experts aren’t sure if the idea that bitcoin prices go up at the end of the year is true.

Why Now is the Prime Time To Buy Bitcoin:Will the price of Bitcoin go up at the end of the year?

Based on the numbers, the fourth quarter has been generally good for bitcoin prices. But experts still can’t agree on why or even if bitcoin prices will rise in the fall.

Numerous people think that crypto buyers, like stock owners, tend to trade a lot near the end of the year. Matthew Hougan, chief investment officer at Bitwise Asset Management, told Money that investors are planning how to set up their portfolios for the end of the year, and a lot of money has been going into crypto placements.

Some people say it’s too early to say anything about how bitcoin prices are going to change. An expert on cryptocurrencies and an associate professor at Columbia University’s Business School named Omid Malekan told Money that he doesn’t know “if bitcoin has a strong seasonal trend or if it’s just a coincidence.”

Even though crypto has been around for more than ten years, it’s still very young compared to stocks or bonds. Malekan says that this lack of enough data makes it hard to judge the truth of any crypto trends.

Malekan says that “eras” may describe bitcoin more than seasonal trends. He says, “The last bull market and crash were driven by central bank liquidity and fears about inflation and the resulting monetary tightening,” he says.  Seasonal trends don’t last for a long time. Instead, how investors behave is what has caused these short-term events.

Do the prices of bitcoin and stocks go up and down together?

But wait, don’t stocks often go up in the fourth quarter too? It’s true. It looks like the prices of Bitcoin and stocks are linked more than you might think. And this link could be what supports the idea that bitcoin prices change with the seasons.

Georgetown University experts found in February that there is a growing link between the prices of cryptocurrencies and the stock market. In particular, they discover that the changes in the prices of bitcoin and the S&P 500 Index are linked and are getting stronger over time. They said that the connection “may show that the two markets are getting closer together as more institutional investors enter the crypto world.”

We don’t fully understand why crypto and stocks have similar price trends yet, but it makes sense that crypto is prone to the same types of selloffs that happen in the stock market.

If this is true, then you might think that bitcoin prices tend to go up at the end of the year, since stock prices tend to go up at the end of the year too. The S&P 500 has gained an average of 4.2% in the last three months of the year since 1950. That’s twice as good as the next best first quarter, which has an average return of 2.1%. Also, September has generally been one of the worst months for stocks, just like it is one of the worst months for bitcoin prices.

Where are the prices of bitcoin going now?

If the idea that bitcoin prices go up at the end of the year is true, the cryptocurrency could keep going on its current roll. But, as the saying goes, past success doesn’t always show what will happen in the future.

In the fourth quarter of last year, the coin lost 12.3% of its value. Of course, bitcoin lost a lot of value all year long in 2022—it dropped 66% in value over the course of the year. It looks like it would have been a bad idea to count on a good end to the year in 2022. In the end, the quarter from October to December was the second worst for bitcoin in 2022.

Lots of experts think bitcoin will go up in value soon because this year has been good for it and people are excited about how crypto investment options will likely change soon.

Anthony Georgiades, general partner at investment fund Innovation Capital, says, “We’re one step closer to a spot bitcoin ETF, and investors are hopeful that an approval could happen pretty soon.” Besides that, a lot of people are looking forward to the next Bitcoin split, which usually starts bull markets.

There is a type of trading fund called a bitcoin ETF that is made up of bitcoin or bitcoin-related companies. At the moment, bitcoin ETFs only hold futures contracts and not the cryptocurrency itself. Both Fidelity and BlackRock are waiting for approval for their spot bitcoin ETFs. These would be the first ETFs to hold bitcoin itself. On the other hand, every four years, the number of coins released decreases by half due to bitcoin halving. The next halving is likely to happen in the spring of 2024.

Some claim that the possibility of the Federal Reserve lowering interest rates in 2024 also contributes to confidence. Meanwhile, CEO Zachary Townsend says that “the cost of servicing the existing and new debt will simply be too high” for the Fed to avoid cutting its rates.

One consequence of this, Townsend says, is “debasement of the currency,” or a drop in value of the U.S. dollar. “It’s in these kinds of environments in particular, when fiat currency is getting debased, that bitcoin performs best.”