Sell in May and go away? While the month may traditionally give equity bulls cold feet, it should probably not be a cause of worry for the bitcoin market.
However, historical data suggests that bitcoin is more likely to build upon its April rally this month.
Notably, the world's largest cryptocurrency by market capitalization has scored gains in the month of May in five out of the last seven years, according to CoinDesk's Bitcoin Price Index.
According to the data:
- BTC appreciated by 73 percent in May 2017 as it jumped from $1,348 to $2,330.
- The decline in the years the price did drop (2015 and 2013) was moderate (less than 10 percent).
Furthermore, BTC has fared well in every second quarter since its creation – the highest being 1,964 percent in Q2 2011, when bitcoin jumped from $0.78 to $16.10.
Clearly, history is on the bulls' side. Further, the seasonality analysis only adds credence to the bullish set up as seen in the bitcoin chart below.
As discussed yesterday, the observed bull pennant breakout could see the recent rally from the April low of $6,425 (Bitfinex price) extend to $10,000 or even higher.
The cryptocurrency has been restricted to a narrowing price range for more than a week and has spent a better part of the last 12 hours trading between $9,150 and $9,300.
As the technical theory has it, the longer the duration of the consolidation zone, the more violent the breakout tends to be. So, BTC could move well above the $10,000 mark in an hour or two post-breakout, if the bulls gain the upper hand.
BTC tends to perform well in May, thus an upside breakout of the narrowing price range is more likely and could yield a quick move higher to $10,000.
On the other hand, a downside break would open the doors to $8,490 (38.2 percent Fibonacci retracement of the rally from $6,425 to $9,767.4).
Only a daily close (as per UTC) below $7,823 (April 17 low) would signal a bear revival.
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