Is the "Sell in May" Strategy Correct? Has Bitcoin Price Bottomed Out?

Crypto money market is experiencing a bumpy ride in early May 2024. The price of Bitcoin, the world's leading crypto asset, witnessed a significant decline on May 1, falling to $56,552. The sudden pullback has sparked concerns among investors and reignited debate about the historic "Sell and Go in May" strategy.

Is the sales strategy in May correct for the Bitcoin price?

Traditionally used in the stock market, this seasonal trading approach encourages investors to sell assets after May 1 and repurchase them later in the year, usually after October 31. When discussing the effectiveness of the strategy, the data shows that Bitcoin prices followed the fall trend in certain years in May; 2013, 2015, 2018, 2021, 2022, and 2023 all saw price declines in the fifth month. Could 2024 be a year that follows this model?

U.S. interest rates affect the market

One of the biggest concerns for investors is the potential for interest rates to remain consistently high in the U.S. With growing concerns that Fed Chair Jerome Powell will adopt a more hawkish stance, the Fed's policy decision on May 1 is crucial. This could mean fewer planned rate cuts for the year and reduce investors' interest in riskier assets such as Bitcoin.

Another reason for uneasiness in the market is inflation. The latest data on Personal Consumption Expenditures (PCE) has created uncertainty, coupled with concerns over stagflation following slowing GDP growth (1.6%) in the first quarter. The U.S. dollar index (DXY) also rose to a nearly six-month high of 106.45, while the U.S. 10-year Treasury bond yield (US10Y) rose to 4.688%. These combined factors are putting pressure on the price of Bitcoin.

What's next for ### Bitcoin?

So where does Bitcoin go from here? Crypto analysts offer contrasting forecasts. Michael van de Poppe expects further fall to $56,000-$58,000 before stabilizing. This represents a significant 20% decline from recent highs. As reported in Kriptokoin.com, Peter Brand paints a bleaker picture, predicting a steeper fall to $47,000-$49,000, citing chart formations showing fall trend and long term possible correction.

#Bitcoin is at the end of the correction.

It's already down 20% from the highs and we'll have some more downside to happen from here.

If the correction continues, then I think the green zones between $56-58K are essential to watch.#Altcoins to bounce before. pic.twitter.com/4Mu3NA1HSg

— Michaël van de Poppe (@CryptoMichNL) May 1, 2024

Despite the current turmoil, there are reasons for cautious optimism. The general outlook on Bitcoin and cryptocurrencies remains positive in the long term. Continued institutional adoption and growing mainstream acceptance continue to drive excitement. However, with the latest Bitcoin halving just 11 days ago, a counterpoint to this optimism has emerged. This pre-programmed code reduction in new Bitcoin production has historically triggered significant price increases. Crypto analyst "MikyBull Crypto" suggests that the Bitcoin may have approached its final local low ahead of a much-anticipated post-halving rise.

There is an allegation of buying pressure for the Bitcoin price

MikyBull Crypto points to the "bull market support band," a historical price range in which the Bitcoin tends to attract significant acquisition pressure, leading to rebounds. He suggests that Bitcoin may have fallen into this support band, indicating a possible reversal. It also emphasizes the importance of global liquidity, that is, the amount of money circulating in the world. Historically, high levels of global liquidity have coincided with Bitcoin price increases. The current liquidity situation appears to be similar to periods before major Bitcoin rallies, leading MikyBull to believe that another rally could be on the horizon.

Global liquidity is strongly correlated with Bitcoin and is currently at a level where it bounced back, initiating a huge rally across the crypto market.

The levels it bounced back in the past were in Oct 2022 and Oct 2023, which initiated a huge rally across digital assets... pic.twitter.com/izo1uyjwHp

— Mikybull 🐂Crypto (@MikybullCrypto) May 1, 2024

The coming weeks will be crucial for Bitcoin and the broader cryptocurrency market. While short-term volatility is expected, long term trajectory remains a matter of debate. Will Bitcoin follow the "Sell in May" trend and witness a sustained decline, or will the post-halving rally take place and usher in a new era of growth? Time will tell.

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