March has historically been one of the worst performing months for Bitcoin, but that trend may not hold this year...
If you do a quick google of seasonality returns and bitcoin you will quickly see that March is one of the worst months for bitcoin in terms of returns.
It's not THE worst month, but it's up there. It basically depends on how you define "worst" and which inputs you include or don't include.
Here's a basic chart of the monthly returns in bitcoin going back to 2011:
(Source: https://ambcrypto.com/heres-why-march-2021-wont-see-bitcoin-dip/)
As you can see, strictly from a red/green perspective and not taking actual numbers into account, you can quickly see that March tends to be a red month far more often than a green month.
In fact, it's only been a green month 2 times going all the way back to 2011.
As you might have guessed, no other month has that many red months over that same time period...
What gives?
The long and short of why March is often one of the worst month in terms of bitcoin returns is likely related to taxes.
With the tax deadline being April 15th, many investors are forced to sell some of their bitcoin and crypto holdings in order to come up with the fiat dollars to pay their taxes.
Interestingly enough, when we look at where we currently, which is the year after a halving event, we can see that one of those green months just so happened to also occur the year after a halving event, that being 2013.
The other 1 year after halving period was 2017, and bitcoin saw negative 12% returns during that month.
Taking those two into account, it looks our odds of having a positive March is about 1 out of 2.
However, that has nothing to do with why I don't think March is going to be bad for bitcoin...
Stimulus Stimulus Stimulus!
The main reason why I don't think bitcoin will have a bad March has to do with stimulus.
As it stands now, the democrats are steadfast on pushing through a roughly $1.9 trillion dollar covid stimulus bill via budget reconciliation.
It will include $1400 checks for qualifying adults and children as well as $400 federal unemployment benefits going through August.
The plan is to get this done prior to the previous unemployment benefits expiring, which just so happens to be mid-March...
While there is no guarantee this bill actually passes, though the odds do look pretty good at this point, this amount of money coming out in the middle to late March will likely send asset prices soaring.
Retail would receive their biggest benefit to date in terms of free money from the government, and there is a very good chance at lest some of that money finds its way into stocks and bitcoin/crypto.
So, while March has historically been a weak month most likely due to taxes, this year the government may be injecting a ton of cash into the system right about the time it's usually leaving.
Add it all up, and there's a pretty decent chance that March ends up not being that bad of a month for bitcoin.
That being said, it really sets up for an awesome April-June, which are historically awesome months for bitcoin.
March is all going to depend on stimulus...
Stay informed my friends.
-Doc