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In a recent statement, Coin Bureau CEO Nic Puckrin shed light on the “sell in May” phenomenon prevalent in the cryptocurrency market.
The “sell in May and walk away” strategy is an old saying from traditional finance (TradFi) that often refers to the impact of seasonality. According to the analyst, over the last five years, the cumulative return of buying Bitcoin (BTC) in October and selling it in April has been 1,449%. However, buying in May and selling in September returned -29%.
According to the analyst, this strategy is statistically significant and various studies show its effectiveness. This effect is just as strong in crypto markets, according to a report by K33 research.
Market sentiment has decreased significantly as we enter May, according to Puckrin. There have been continuous ETF outflows in the US, with net outflows of $632 million seen in the last five days. Hong Kong ETF flows were also much lower than expected.
While daily trading volume and volatility dropped to their lowest levels in the last two months, futures premiums also fell to their lowest levels in the last three months. Permanent funding rates have fallen significantly, and CME futures open interest held by non-ETF funds is at its lowest level since October 2023.
However, according to the analyst, the dissolution of the Treasury's General Account could be a potential savior. This could provide a liquidity injection of up to $1.4 trillion into risky assets. Whether Yellen and her team decide to provide this much-needed stimulus depends on many factors, including the state of the labor market, GDP growth and the administration's desire to win the election.
Puckrin is inclined to think the Treasury will be forced to act. So, although many people sold in May, they may not stay out of the market until November.
*This is not investment advice.