The Chinese New Year has begun and that could spell good news for Bitcoin as history shows that whoever bought the digital currency on the first day of the event and sold 10 days laterhad an average return of +9%, with all of the past eight years (2015-2022) showing positive returns.
This represents a 100% success rate (8 wins, 0 losses). If history is any guide, investors who bought Bitcoin last Sunday (22) can sell it 10 days later on Wednesday, February 1, 2023, for a 9% higher value, according to a new report from matrixport, the financial services platform for digital assets.
The cryptocurrency market is on the rise, with Bitcoin and Ethereum posting +31% and +36% returns in 2023 respectively, and they could rise further.
Bitcoin before and after Chinese New Year
Chinese New Year has been a time of uncertainty for Bitcoin investors, and as Matrixport claims the digital currency has turned bullish during the holidaysin recent years, the price of cryptocurrency has dropped significantly in the days before and after the holiday.
For example, in 2018, Bitcoin experienced a massive 50% drop, from $12,000 to $6,000. In 2019, the drop wasn’t quite as steep, but it still happened, with the price falling from $4,200 to $3,650.
However, the year 2020 was a bit different, with Bitcoin surging on the first day of Chinese New Year, breaking above the $9,000 resistance and reaching peaks around $10,500.
However, on the second day of the holiday, a correction took place and the price dropped to just above $9,000. Unfortunately, this downward trend continued when the pandemic hit global financial markets in March 2020.
The annual decline in Bitcoin price before or after Chinese New Year may be due to the withdrawals of revelers for the holiday season. Investors prefer to sell some of their holdings to have cash in their holiday budget.
This is an important holiday in China and other Asian countries such as Hong Kong, Singapore and Korea. During this time, many workers travel back to their hometowns to celebrate with their families, representing the world’s largest short-term migration.
With a population of 1.386 billion, this means many factories and operations in China are shut down for up to 2 weeks.
Bitcoin and Ethereum on the rise
According to Matrixport, while some argue that a positive macroeconomic environment helps all risky assets to perform well, the fact remains that digital assets are once again outperforming traditional financial assets.
In 2023, US equities (S&P 500) are up 3% as US inflation rates begin to ease and an eventual “Fed Pivot” is expected to herald the end of the Fed interest rate bull cycle.
This rise is being noticed by cryptocurrency institutional investors, who continued to develop their digital asset investment opportunities in the winter of 2022.
While Bitcoin is valued as the leading and most trusted cryptocurrency in the market, the fundamental reason behind Ethereum’s rise this year can be attributed to transaction fees rising again.
To transact with blockchains and protocols, users have to pay fees, and as users’ activities increase, so do the fees.
These fees are usually paid with tokens, and when more tokens are used to pay fees (burnt and withdrawn from circulation), the underlying cryptocurrency (ETH) becomes deflationary, as there are fewer tokens in circulation.
Source: Live Coins
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
