The lunar festival, held during different weeks of the Western calendar each year, will mark the beginning of a new year in the traditional calendars of several Asian nations. This year, the event falls on January 25.
Will Chinese New Year Crash Bitcoin Price?
It’s pretty well documented that calendar events can impact markets. That is to say certain holidays seem to cause market anomalies. Traders and analysts have studied the effect of winter holidays in the US stock market for years, for example.
Given its global nature, you would not expect to see such anomalies in the Bitcoin market. However, with a lot of its earlier history revolving around China, theories about certain traditional holidays and their impact on price have developed amongst Bitcoiners. From a Western perspective one of the most intriguing of these is the Ghost Festival in August or September. Entrepreneurs are advised not to do business during the period, which, according to superstition, sees the gates of hell opening and spirits unleashed on the earth. Each year, people speculate as to the impact of the festival on the Bitcoin market.
This week it’s another lunar holiday celebrated across East Asia, Chinese (or Lunar) New Year. Typically, traders anticipate selling in the few weeks leading up to the event. The theory goes that holders of Bitcoin cash out some of their investments to fund the revelry going on during celebrations.For me this is the last push before the chinese new year sell offFor reference:
Bitcoin dumpedChinese new year 2018
Bitcoin dumped Chinese new year 2019
Bitcoin _ _ _ _ chinese new year 2020Will it be different this time ?
— TheWolfOfAllStreets (@GerardWalker5) January 18, 2020
Bitcoin price did decrease leading into the Lunar New Year on the years mentioned in the above tweet. However, the drops came much earlier before the event itself.
The New Year is this week. Typically, price declines have occurred between two and four weeks prior to the event. Looking further back in Bitcoin’s history produces results that counter this extremely small sample size too.
As pointed out by economist and trader Alex Krüger below, Bitcoin history suggests that a dump so close to the New Year celebration is now unlikely. In previous years, Bitcoin’s average daily returns in the three weeks immediately preceding the event shows that the digital currency has largely traded sideways.
Some think the Chinese New Year may impact $BTC negatively, as people sells bitcoin to purchase presents.
Chinese New Year starts with the 2nd new moon after the winter solstice. This year it falls on Jan/25.
Data indicates $BTC does not underperform preceding the Chinese NY pic.twitter.com/HSubtvss8c
— Alex Krüger (@krugermacro) January 17, 2020
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