Will crypto get hit by the usual ‘summer slump’?

After a very good month of March and what looked like the start of a bull market in April, the month of May is proving a bit trickier for Bitcoin. It is touch and go whether the largest digital currency will end the month on a positive note. The stock markets have also been having a slightly harder time in recent weeks. Are we at the beginning of that dreaded ‘summer slump’?

Sell in May

With last week’s Chinese correction, the mood of the stock markets seems to have reversed for a moment. Both the Nasdaq and the S&P 500 are lower than they were two weeks ago. The old stock market adage ‘sell in May and stay away’ seems entirely correct when looking at Bitcoin’s result for the full month as it is virtually unchanged.

Of course, you must remember that the last part of that stock market adage says you should buy again in September.

As a reminder, that stock market saying dates back to the 1920s, when the Carnegie Halls, the JP Morgans, the Vanderbilts, and all the other wealthy families retreated to their private estates starting in May (to spend the summer there) and did not return to the city until early September.

As a result, fewer shares were traded during the summer months, and losses were consistently larger on average. From September onwards, the ‘big’ money returned, and shares that had fallen in previous months were bought up by larger investors as they looked ‘cheap’.

Support

Bitcoin needs to remain above the $73,000-$76,000 level to avoid dropping this summer to a possible retest of the February low of $60,000. A renewed rise of Bitcoin to the $80,000 level is desirable. Many sellers are also still waiting at the $82,000.