An analyst for the market intelligence platform CryptoQuant has predicted that bitcoin (BTC) could experience the “sell in May effect” in the coming months, even as the bull cycle remains unfinished.

According to the report by Oinonen, BTC is expected to have a sideways summer and experience elevated price levels by the last quarter of the year following the sell in May effect.

The Sell in May Effect

The sell in May effect is a concept that refers to the seasonality of traditional finance. The saying is based on the idea that stock market returns are often higher from November to April compared to May through October.

The investment strategy dates back centuries and suggests that stocks perform weaker from May to October; hence, investors should sell their holdings around May and reinvest around October.

The adage dates back centuries and postulates that the best six months of the year for stocks are recorded from November through April, suggesting that investors should sell in May and wait until October to buy again.

While this saying has applied to the stock market majorly, a 2024 report by the cryptocurrency research firm K33 revealed that buying BTC in October and selling in April has accrued cumulative returns of 1,449% between 2019 and 2023, while buying in May and selling in September has recorded a negative return of -29% over the same period.

Bitcoin Still Has More Upside

In line with the postulation of the sell-in-May effect, Oinonen insisted that BTC will see a rally in price by the last quarter of the year. The market has seen a repeat of the positive Q4 seasonality in 2013, 2016, 2017, 2020, 2021, 2023, and 2024.

Also, the CryptoQuant analyst noted that BTC may not experience a deeper price correction in multiple months or even a year. However, macro events and geopolitical tensions could significantly affect risk-on assets, including the leading cryptocurrency.

Meanwhile, Oinonen explained that BTC is currently consolidating around the $97,000 level after reaching an all-time high of $109,000 in January. The possibility of a technical correction still lingers, but the halving cycle is far from over.

Compared to the previous such cycle, where BTC surged 686% between May 11, 2020, and November 8, 2021, the cryptocurrency has only climbed 63% since the latest halving on April 20, 2024. Oinonen said Bitcoin’s power-law model and law of diminishing returns suggest moderate price performance in the future; however, the 63% rally indicates plenty of upside and an unfinished cycle.