Will Bitcoin Price Benefit From The Halloween Effect?

Tony "The Bull" Severino

5 years ago

3 mins read

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There’s a theory, dubbed “The Halloween Effect” that believes that stocks and other assets like Bitcoin perform best starting from October 31 through May, then they do during the other half of the year.

Will Bitcoin price benefit from such effect, or is the idea nothing more than an appropriately spooky superstition for this time of the year?

What is The Halloween Effect?

Investors and traders use a number of tools such as technical and fundamental analysis to attempt to determine the strength or weakness of an asset before setting a buy order. Some analysts use more unorthodox methods, such as dates, cycles, math, and even astrology.

There’s even a common theory that each year, starting in November, assets will perform better and provide greater returns on investment through May, than they will in the other half of the calendar year.

This theory is called The Halloween Effect, The Halloween Indicator, or The Halloween Strategy and suggests that buying an asset to hold throughout the winter months will reward the investor handsomely. The trader or investor is then encouraged to “sell in May and go away” – the other half of the market timing-based strategy.

But does this also hold true for Bitcoin markets? Data from each October 31 through May 1 period dating back to Bitcoin’s last bull market suggests that the theory may prove to be accurate, sans just one period on Bitcoin price charts.

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Bitcoin Price Gains On Average Nearly 50% Per Halloween Through May Timeframe

As the bear market came to an end for Bitcoin in 2015, October 31 through May was the kickstart to the bull run crypto investors needed, bringing those who invested in the young, emerging asset over a 41% increase.

During the next Halloween Effect timeframe, running from October 31, 2016, to May 1, 2017, Bitcoin’s bull market was in high gear and brought investors a 117% return on investment. Although, had investors listened and sold in May as they are told, they would have missed out on another 335% increase.

Between October 31, 2017, and May 1, 2018, Bitcoin had set its all-time high of $20,000 and retraced back down to $5,800 at that point, yet on May 1, 2018, Bitcoin had still increased over 52% from the previous Halloween. Sell in May and go away would have worked well in this case, as Bitcoin entered into a deep bear market after this.

From October 2018, through May 2019, it was the only decline following Halloween, resulting in a -12.5% drop in value.

This Halloween, Bitcoin is interestingly trading at roughly the same price it was trading at on May 1, 2018. The crypto asset is currently priced at $9,200 per BTC, following the asset’s third-largest single-day gain in its history.

Could the massive pump be investors gearing up for The Halloween Effect? It’s possible – on average, Bitcoin rose nearly 50% from October 31 to May 1 in each year analyzed. With Bitcoin’s halving set to take place in May 2020, the potential for an increase this time around is the greatest its been. And with prices expected to reach $55,000 per BTC by the next halving according to a highly cited stock-to-flow model, it could result in the largest Halloween Effect gain yet in Bitcoin, taking the price to $55,000 as predicted and resulting in a staggering 497% gain from current prices.

Happy Halloween!

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.