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Author Topic: Bitcoin Monthly Return Heatmap 2013-2017 - Trade or HODL Long-Term?  (Read 89 times)
Cryptodaddy05
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March 31, 2018, 03:09:15 AM
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 #1

This is an interesting visualisation of Bitcoin returns monthly from 2014-2017 as a ‘heatmap’ - https://flic.kr/p/25Eedr4 (sorry I couldn’t get the image to post here).

The peak monthly returns for those 4 years are nearly always in May/June and Oct-Dec, which reminded me of that old stock market adage from England about seasonal returns being lower in the hot summer months - “Sell in May and go away, come back on St Leger’s Day” (mid-Sept)!

While bitcoin doesn’t have a hundred years of data to look back on like the stock markets, it is interesting to look at the average monthly returns for the 4 years 2014-2017 as follows:

Jan -10.25%, Feb +3.5%, March -10.25%.   } 4-yr avg return Jan-March -5.75%/mth
April +5.5%, May +28.5%, June +12%        } 4-yr avg return Apr-June  +17%/mth          
July +2.75%, Aug +7.5%, Sept -5%            } 4-yr avg return Jul-Sept  +1.75%/mth
Oct +20.25%, Nov +21.25%, Dec +14.75% } 4-yr avg return Oct-Dec  +18.75%/mth

So if you were looking to seasonally trade bitcoin over those 4 years, then the returns before costs for being in bitcoin for the best 6 months of Apr-Jun and Oct-Dec would have been +17%/mth vrs being out of bitcoin the worst six months of Jan-March and Jul-Sept when the overall return was -2%/mth. And interestingly the bitcoin returns so far in 2018 of -25% in Jan and +13% in Feb and -38% in March with an avg Jan-Mar 2018 return of -16.75%/mth, has followed the general trend for bitcoin in those 3 months and the avg -5.75%/mth return seen in the previous 4 years.

So are we onto something here with the idea of buying bitcoin at the start of April and selling at the end of June and buying again at the start of October and selling at the end of December to maximise returns? Well a strong word of caution first, as detailed in this excellent Forbes article from April 2013 https://www.forbes.com/sites/rickferri/2013/04/08/busting-the-sell-in-may-and-go-away-myth/#402a202f8808 looking at the myth of improving returns from the Stockmarket from holding stocks the 6 mths from Nov-Apr and cash the 6 mths from May-Oct. Yes the average returns on the Dow Jones from 1950 were 7.5% from Nov-Apr vrs 0.3% from May-Oct, but a definitive ‘mythbuster’ study from CXO Advisory Group showed the return on $1 invested in the US Stockmarket for 140 yrs from 1871-2011 under 3 scenarios was this:
1. Hold stocks Nov-Apr and hold cash as Treasuries May-Oct - $1 grew to $1,000
2. Hold cash as Treasuries Nov-Apr and hold stocks May-Oct - $1 grew to $75
3. Holding stocks all year round with no seasonal cashing out - $1 grew to nearly $200,000 **** HODL ANYONE!!

As a believer in bitcoin and blockchain and how it is going to revolutionise finance and most industries and the world as the Internet 3.0 is increasingly adopted by the general population over the next 10-15 years, I tend to agree with the long-term investment advice at the end of the Forbes article which paraphrased for the Crypto world is to ‘Hold a diverse portfolio of bitcoin and quality crypto assets based on your needs, and rebalance occassionally!’


So what do people think of the idea of a ‘seasonal’ flavour to bitcoins returns - three months on, three months off?
Do you think the start of April this year is a good time to buy bitcoin, and that it will match the average +15%/mth returns for Apr-Jun 2013 to 2017 in Apr-Jun 2018 - or not?
And do you think the Stockmarket data from CXO Advisory showing 99% better long-term returns from holding an index of stocks all year round vrs holding stock for the 6 months of the year with the best avg returns and holding cash/Treasuries the other 6 months is going to be applicable to crypto investing long-term too, and is that a reason to just buy bitcoin and quality alts at the best price you can and hodl long-term with rebalancing rather than trying to time the market by moving your investment money in and out of crypto using seasonal or other popular trading methods?
Comment and opinions very welcome.


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March 31, 2018, 06:02:44 AM
 #2

hm, it's nice. thank you for it
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March 31, 2018, 06:49:12 AM
 #3

Obviously no one can time the market; even investing gurus cannot do such, what more would you expect on the average investor? So far, the HODL strategy proved to be one of the best methods to profit, irregardless of the 'seasons' as projected by the CXO Advisory. Also, even their data proved that HODLing provided the best results in investing, so even in this case, bitcoin HODlers, on paper, outperforms those who try to time he markets which often find themselves burned in doing so.

My take: HODLing > trying to time the markets.

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March 31, 2018, 08:16:46 AM
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Bitcoin's weakest month traditionally has been March, hopefully that holds true for 2018 as well, I'm sure that some people do time it and have had some success in doing so, selling around December and buying back in April would seem to work well historically but there's not enough evidence to suggest it will hold true in the long term.

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March 31, 2018, 02:06:09 PM
 #5

I dont have any merit to send.

This is very useful information. I bookmarked the table.

Did you notice that people are always making TA predictions, but nobody seems to care for FA?

The fundamentals are being ignored by these bears.

And these fundamentals are stronger than last year, much stronger. They get stronger each day, that's why there is low volume in the exchanges, because people dont want to sell, we have more hodlers than ever before.

2018 is bearish, like 2014. But they are different as we have stronger fundamentals now. Maybe we have a four-year cycle of renovation? What will 2019 and 2020 bring?



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March 31, 2018, 08:41:37 PM
 #6

I dont have any merit to send.

This is very useful information. I bookmarked the table.

Did you notice that people are always making TA predictions, but nobody seems to care for FA?

The fundamentals are being ignored by these bears.

And these fundamentals are stronger than last year, much stronger. They get stronger each day, that's why there is low volume in the exchanges, because people dont want to sell, we have more hodlers than ever before.

2018 is bearish, like 2014. But they are different as we have stronger fundamentals now. Maybe we have a four-year cycle of renovation? What will 2019 and 2020 bring?



Given we are in a fundamentally stronger position I think any bear market that we have this year (presuming it doesn't end soon) will be shorter and less painful than the one we experienced in 2014.

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April 01, 2018, 05:05:37 AM
 #7

hm, it's nice. thank you for it

Thank you for the kind words - yes it’s good for thought isn’t it as we finish off March with a crash of the total market cap to below that spike down on February 6 we all remember. Still holding my bitcoin and what I consider to be promising alts with strong hands - and hoping we might get something like that average return of the last four years of 17%/month from April to June again, but history rhymes and never repeats as they say and I think we’d be happy if the average monthly return the next 3 months is something above 0% and not negative. But time will tell!

I was thinking it might be interesting to repost this with updated figures after each quarter for the next 4 years, and see what’s come to pass compared to the past. Wonder what’s in store in that time for bitcoin?

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April 01, 2018, 05:16:40 AM
 #8

there are two different approaches here in my opinion.
1. long term and mainly HODL where you just buy at the bottom and don't touch it for a long time and sell when you see a big bubble for example and buy back after its correction. there is a very nice profit in this for example buying in 2015 at $200 and selling in 2017 at $20000 was a 100x profit in 2 years!
2. the short term and mainly day trading bitcoin. which can also be as profitable, maybe even more profitable than just holding but much much riskier. for example looking at charts you can see last year alone we had maybe twenty big drops every couple of weeks each as big as 30%. taking advantage of each of these swings could give a day trader a huge profit.

the thing is, both strategies are good as long as performed wisely.

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April 01, 2018, 05:17:49 AM
 #9

Bitcoin's weakest month traditionally has been March, hopefully that holds true for 2018 as well, I'm sure that some people do time it and have had some success in doing so, selling around December and buying back in April would seem to work well historically but there's not enough evidence to suggest it will hold true in the long term.

Yes it’s an interesting pattern that speculative type rally in Oct-Dec that’s occurred the last three years, and then the losses that’s have followed in each of the three January and March months with a gain in February. And if history hold true we’d be looking for a good three months now from Apr-June, but I agree that we can’t read too much into that pattern and many other factors are at play in the crypto markets at the moment. And I’m just a holder I guess, with adjustments to my portfolio trying to catch the wave up of bitcoin and the wave of alts up that follows it and trying them to take some profits and be mainly in bitcoin for the next crash - and I agree that being all in and all out based on old trading patterns isn’t the way to go cause the crypto market is a changeable beast!

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April 01, 2018, 06:09:42 AM
 #10

I dont have any merit to send.

This is very useful information. I bookmarked the table.

Did you notice that people are always making TA predictions, but nobody seems to care for FA?

The fundamentals are being ignored by these bears.

And these fundamentals are stronger than last year, much stronger. They get stronger each day, that's why there is low volume in the exchanges, because people dont want to sell, we have more hodlers than ever before.

2018 is bearish, like 2014. But they are different as we have stronger fundamentals now. Maybe we have a four-year cycle of renovation? What will 2019 and 2020 bring?





Thank you - and yes fundamentals matter! I agree the big picture is often missed that when bitcoin does start rising again the positive and speculative media articles and positive chatter on social media will bring in a new and bigger wave of people wanting to be in crypto and FOMOing into bitcoin and then other alts pushing bitcoin and the market to new highs well above those in December and January - but even more than that I think about what will happen to the price of bitcoin and cryptocurrencies when use and investment becomes standard for 5% of the world adult population compared to the 0.5-1% estimated how for us early adopters - and then what will happen when penetration of crypto into the general population hits 10-20% in 5-10 years, to the price of the limited number of bitcoins and the successful alt platforms and protocols and DApps making up the decentralised private and secure and rewarding internet 3.0 that will be starting to take over from the centralised internet 2.0 we have now. I think the skies the limit, and there’s a fortune to be made in crypto by most of we early adopters in it now - with sensible investment decisions and holding over the next ten to twenty years!

And I doubt we will have a crypto winter as long as that three years it too from Dec 2013 to December 2016 for bitcoin to get back over $1,000 after a speculative bull market in 2013 up to $1,135 before the crash to $400 in $2014 and $250 in 2015 - and I’d be surprised if we don’t see bitcoin back at $20K by the end of the year, which should make all holders ‘in the money’ and especially the ones buying before November last year and ones buying now at $7-8K. And I think there will be further rallies much higher in 2019 and 2020, with the inevitable crashes down as well of course - but with bitcoin following that long steady rise in value seem on the long-term log scale of its price from 2010-2018 https://imgur.com/gallery/nD4rH !

Yeah wonder if it will hit that $1 Mil dollar price that the long term growth line on the log scale graph suggests it might do in say 6 years - mmmm $1 million dollars for a bitcoin in 2024?! “Who’d have known we’d all say them as we count our millions - if it keeps going of course and doesn’t crash and burn, and that’s the great unknown!

And some merit would have been nice. I was here before the merit system came in in February, but missed being grandfathered in as a member. Yeah I don’t know who’s getting all the merits members have, but it ain’t me except for my solitary one. But it’s not something I worry overly about, except when the signature thing comes up with ICO campaigns. Not much booty as a jnr member infortunately. But no complaints - have a nice easter and nice to talk fundamentals! James.

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April 01, 2018, 06:32:55 AM
 #11

So are we onto something here with the idea of buying bitcoin at the start of April and selling at the end of June and buying again at the start of October and selling at the end of December to maximise returns?



After looking at the graph you are attaching I tend to do this one. I know trading conditions are unlikely to recur in the same period or month but I have a strong belief that this will happen.

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April 01, 2018, 06:38:21 AM
 #12

I dont have any merit to send.

This is very useful information. I bookmarked the table.

Did you notice that people are always making TA predictions, but nobody seems to care for FA?

The fundamentals are being ignored by these bears.

And these fundamentals are stronger than last year, much stronger. They get stronger each day, that's why there is low volume in the exchanges, because people dont want to sell, we have more hodlers than ever before.

2018 is bearish, like 2014. But they are different as we have stronger fundamentals now. Maybe we have a four-year cycle of renovation? What will 2019 and 2020 bring?





Ps: my merits suddenly grown to 3, so I felt bad I’d written about being stuck on one to you - and there’s other things there I haven’t seen before like politeness and imagination. Always got to be a gentleman in all things hey!

And I meant to say when I sent that long term log graph of bitcoins price and fairly steady upward growth when you get rid of all the short-term noise, that the price of bitcoin right now of $6.9K looks tempting if you believe that long term growth is going to continue, but as they say ‘don’t try to catch a falling knife’ so I’m waiting and watching!

Just out that graph and that sentiment up as a post of you’re interested in having a look, and I always appreciate input from a ‘fundamentals’ man like you! https://bitcointalk.org/index.php?topic=3232852.msg33649003#msg33649003 - Cheers

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