Bitcoin Hits $50,000 Milestone With The Help Of Lunar New Year
(Bloomberg) -- Bitcoin's headline grabbing jump to $50,000 came as little surprise to traders noting a seasonality effect in a corner of the crypto market: The digital asset tends to move higher in light trading around the Lunar New Year.
The oldest cryptocurrency's remarkable comeback to the highest levels in more than two years has been closely associated with the US approval of spot Bitcoin exchange-traded funds last month. But the frenzy attached to Bitcoin ETFs appears to have already waned, with the average daily trading volume in the crypto market falling to $113 billion so far this month, down from around $149 billion in January, according to crypto trading data firm CCData.
That drop in trading volume is seen as likely resulting from the Chinese new year holidays, when many people in the Asia Pacific region travel and spend time with family and friends. Meanwhile, Bitcoin hit the milestone on Feb. 12, two days after the official new year began, with holiday celebrations often lasting for a week and even longer.Â
“BTC historically at least has gone up” just before or after the Lunar New Year, said Shiliang Tang, president of principal trading firm Arbelos Markets. “So there's some seasonality” behind the price move.
While light trading can exacerbate price swings in both directions, Tang said during the “Chinese New Year money gifting is big tradition. Sentiment is more positive.”
CCData also noted that January's volume was “inflated” due to the Bitcoin ETF hype, but still low compared with a historical average.Â
The average daily volume has been at around $198 billion since January 2021, according to Joshua de Vos, research lead at CCData. But volume during the Lunar New Year holidays has been “significantly lower” in comparison to the rest of the year, he said.Â
This data supports the thesis that the Chinese Lunar New Year does seem to materially depress average daily volumes, he said.
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©2024 Bloomberg L.P.
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