Crypto Summers: What to Expect in Coming Months?

We are slowly approaching summer. In fact, this is a  special time for the Crypto Industry. Traditionally, during the summer period, the whole sector seems to be a bit more “slow.” This means that there are not usually any significant price movements or even news that would change the sentiment. Most of the important moves usually happen after the summer period. With that in mind, let us explore what happened in the crypto space during the summer period in previous years.

Do Not Expect Much from Summer

During the summertime, Bitcoin entered either a consolidation phase or an accumulation phase. Therefore, huge price movements were rarely seen during July and August (maybe except August 2017), as is visible in the table below.

Bitcoin monthly returns (%), Source: Bybt

The trading activity over July and August has historically been significantly lower than any other months. According to some, this is due to the holiday season, which means that fewer traders are actually working, leading to lower volumes and therefore has less impact on price action. Institutional investors and traders especially are usually considered to be “off” for vacations, which means that a huge chunk of trading volume disappears for summer.

What is more interesting to note is the fact that crypto summers are usually followed by a red September. This means that after the summer, the last month of the Q3 tends to close in minus for Bitcoin (and most of the other cryptocurrencies). What is however good to know is also the fact that after the red September comes usually green October. In fact, October is one of the most bullish months of the year for cryptocurrencies (second only to February). This would all support our initial hypothesis that summer serves as an accumulation stage for a bigger movement, which usually happens by the end of the year.

Bitcoin price volatility, Source: Bybt

Moreover, volatility during the summer period is usually pretty low. This would again support the hypothesis that fewer traders are actually trading, with Bitcoin being in either the accumulation or consolidation phase. These are phases where large price movements are usually uncommon, leading to lower volatility numbers.

June 2021 and Its Importance

The end of June 2021 will be exceptionally important, since for the first time in the history of Bitcoin, we can be looking at a possibility that Q2 will close with all 3 months in red numbers. This has never happened before. In fact, Q2 is usually the second most bullish quarter in a year (with Q4 being the most bullish one), which means that if all 3 months of Q2 close in red, there will definitely be more people talking about Bitcoin entering a bear market.

Therefore, closing June 2021 in red might lead to a bit more bearish sentiment, which can subsequently affect the summer period. That is one of the reasons why June’s monthly close will be important. Moreover, June will also close Q2, as well as the first half of the year, so a more rebalancing of portfolios can be expected. And since the first half of the year 2021 will likely end up overall in green numbers for Bitcoin (and most other cryptocurrencies), the possibilities of locking in profits by some of the bigger investors or institutions by selling at least some part of their positions might occur.

The impact of institutional investors has been rising over the last months, but institutional investors tend to trade less during the summer period. Therefore summer in the crypto space might be a bit different, however, it is always good to know what happened in the past, since Bitcoin is still one of the most cyclical and seasonal assets in the financial markets. And if the past is any indication (which can, but does not have to be true), then we are in for probably a rather boring crypto summer when it comes to price action, which can then be followed by some huge movements in September and October.