Correction or the beginning of a new bear market for crypto?

The month of May started dramatically for Bitcoin, Ether and all other major cryptocurrencies. Just after nine o’clock yesterday morning, around the time the Asian markets close, a real sell-off began, with Bitcoin dipping below the psychologically important $60,000 mark for the first time in two months.

Analysts think there is support in the zone around $52-$55,000, but we still have to dare to think longer term. Is this still a normal correction (for stock exchanges it is 10%, for crypto usually 20%) or the start of a new bear market?

April

You may not have noticed, but with a loss of 16%, the month of April 2024 was the worst Bitcoin month since November 2022, which was the month in which the major crypto platform FTX went bankrupt.

Everything was positive in those first three months of 2024, but ever since April the mood of the markets seems to have reversed. The old stock market adage ‘sell in May and stay away’ seemed completely correct yesterday, May 1st.

The Bitcoin bears are back in town. pic.twitter.com/fMPIVyioEG

— Wendy O (@CryptoWendyO) May 1, 2024

Of course, you should remember that the last part of that stock market saying advises you to buy back in September, and for the last five years this has been the right call for Bitcoin as well.

“A trader opting for a strategy of buying BTC on the May open and closing the trade on the September close would’ve seen a cumulative return of -29% in the past five years,” K33 analyst Vetle Lunde said. “Whereas a trader buying the October open and selling during the April close would’ve experienced a massive 1,449% return.”

As a reminder, that stock market wisdom dates back to the 1920s, when the Carnegie Hall’s, the JP Morgan’s, the Vanderbilts and all the other wealthy families moved to their private estates in May (to spend the summer there). and did not return to the city until early September.

As a result, fewer shares were traded during those summer months and the average losses were mostly greater. From September onwards the ‘big’ money came back and shares that had fallen in previous months were bought up by the larger investors as they thought these were being offered ‘cheap’.

Bear market

So if this is a correction, we would normally consolidate for the next few days before heading higher again. If this is indeed the start of another bear market, the stock markets will probably also head lower from now on, because ever since the introduction of (the American) Bitcoin ETFs, the cryptocurrency market has been following the stock market much more closely since the beginning of this year. The next few days will clear up a lot of uncertainty.