Bitcoin Monthly Cyclicality Paints a Grim Picture for the Last Week of February

Over the past year, bitcoin has shown a cyclicality that has been on a semi-regular basis. For most of last year, most months had ended on a positive note with green candles dominating the market. While most months were positive, there were significant differences between the first half of the month and the second half. This push and pull pattern has continued into the new year, with bad news for late February.

Looking at the monthly cycles until 2021

Eight months out of the last 14 months posted positive returns mid-month. Over these eight months, returns have not continued through the end of the month for five months, leaving only three months of positive returns mid-month to the end of the month. Most of bitcoin’s gains were recorded in the first half of the month, while the second half mostly suffered losses.

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These periods of gains and losses usually coincide with the expiration date of the CME future, which usually occurs in the middle of the month. And from the middle of the month to the next due date, the pattern usually progresses as illustrated in the chart below.

BTC Monthly Cyclicity Shows Interesting Pattern | Source: mysterious investigation

By following this pattern from the past year, a trader would have made significant profits in the past year. That is, if they bought the digital assets when the CME futures expired and then sold them mid-month. Conversely, a trader would lose more than 50% of their initial investment, indicating that timing the expiration of the CME futures and tracking bitcoin’s cyclicality could be a beneficial strategy.

End of February not looking good for Bitcoin

As this cyclicality has continued into 2022, the last week of February may see digital asset bottoming out. Bitcoin and other cryptocurrencies are already rocked by social and political problems, most recently Russia’s invasion of Ukraine. These have seen the digital asset plummet to $35,000, taking bears completely by storm.

BTC Recovers Above $35K | Source: BTCUSD on TradingView.com

In the first half of February, bitcoin had registered a growth of 17%. But from the middle of the month to the end of the month it has been rejected, already losing more than 12%. If this pattern continues, bitcoin is looking at another week of losses before ushering in March. This would mean that the digital asset could see significant growth from early March to mid-month.

Related literature | Data says Bitcoin is more resilient to macro turmoil than Altcoins

It is still unclear what leads to this cyclicality. However, the future outcome of the CME has presented one of the strongest arguments for it. mysterious investigation notes that the digital asset is known to revert to its monthly VWAP price that coincides with the maximum pain price of monthly options. Although it is still unclear whether this is the reason for this cyclicity.

Featured image from USA Today, charts from Arcane Research and TradingView.com

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