Bitcoin, the largest cryptocurrency by market capitalization, tumbled nearly 7% last month. That’s well in excess of its average June loss of 0.35% over the past 11 years. However, some experts believe favorable seasonality could kick in for bitcoin now that the calendar has turned to July.
The digital currency showed some signs of life early in the first trading session of the seventh month. It then waned late into evening. But Monday was just the first day of what is a long month. That means there are 30 days left for bitcoin to live up to its encouraging July track record. Over the past 11 years, bitcoin posted an average July return of 7.31%, according to Coinglass data.
Over the past four years, a period including a 4.02% drop in July 2023, bitcoin averaged a gain of more than 13% in the seventh month of the year. What makes bitcoin’s seasonality all the more interesting in July 2024 is the cryptocurrency’s history of notching impressive July gains after slumping in June. And that’s exactly what happened last month.
Issues to Consider
Regardless of asset class, experienced traders know that, while seasonality makes for interesting footnotes, it’s most potent when combined with credible fundamental and technical factors. That’s one way of saying seasonality alone isn’t a promise of upside or downside.
One issue that could keep a lid on price appreciation over the near term is the upcoming Mt. Gox reimbursement. The defunct crypto exchange is expected to begin reimbursing former clients 10 years after it was hacked. That is $9 billion worth of bitcoin that will eventually come to market to compensate victims.
Related fears are among the reasons bitcoin tumbled last month. On a recent edition of the Unchained Podcast YouTube channel, Alex Thorn noted the Mt. Gox liquidation may not be as harmful as some crypto investors believe it to be.
“Thorn says the fear surrounding the Mt. Gox saga is likely overblown. [His] research indicates that less than half of the coins will likely be available to be sold on the open market upon issuance. He also says the recipients are likely to hold on to their BTC stack instead of selling right away,” reported Henry Kanapi for The Daily Hodl.
Thorn noted the Mt. Gox sales may not stifle bitcoin over the near term. That’s because some creditors already sold claims to fund managers at a discount rather than wait years for compensation. That means the amount of bitcoin that could come to market via the liquidation could be less than expected.
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