Does Chinese New Year Really Have An Impact on Bitcoin Price?
Chinese New Year is just around the corner and the crypto market is once again debating its correlation with the prices of cryptocurrencies especially bitcoin.
Chinese New Year or Lunar /Spring Festival is the most important holiday in the country and sees the country slow down. Most companies or factories close for 7 days or longer to allow their staff to go back home to reunite with their families and friends for the holiday. This year, the event falls on January 25.
A popular theory goes that crypto sell-offs will be triggered ahead of the New Year holiday as a significant number of Chinese investors flock to cash out their bitcoin for holiday expenses. That is to say, the country’s most important holiday seems to cause the market anomaly.
While historical data shows that most years have seen only minor ups and downs in the price of bitcoin during the festival. Looking back in bitcoin’s history indicates in most cases, the price of bitcoin grew steadily during the Lunar New Year, according to a recent analysis of bitcoin price during Lunar New Year 2020 by major crypto exchange Gate.io.
Bitcoin price movement 30 days before and after Chinese New Year
The research by Gate.io points out that bitcoin price mostly increased around the Spring Festival, but the climb was not that significant in the terms of the whole year. While in the short term, the upward trajectory is still obvious for most years.
Yet the ups and downs cannot be attributed only to the New Year festival. There have been plenty of other factors that have led to bitcoin’s volatility.
The latest upward trend in bitcoin price was driven up by the recent U.S.-Iran tensions as bitcoin is regarded as one of the safe-haven assets; bitcoin halving effect seems to be testing the market at the fresh start of the year, and the market accepted China’s president Xi Jinping’s blockchain endorsement as a bullish signal for cryptocurrency adoption.
Notable crypto analyst Alex Krüger also suggested that bitcoin does not underperform preceding the Chinese New Year.
Some think the Chinese New Year may impact $BTC negatively, as people sells bitcoin to purchase presents.
Chinese New Year starts with the 2nd new moon after the winter solstice. This year it falls on Jan/25.
— Alex Krüger (@krugermacro) January 17, 2020
The advent of Chinese New Year has led some investors to pay particular attention to the holiday’s potential effect on the crypto market, while historical data and latest reports show that the macroeconomy, regulator’s attitudes and technology advances are factors that have a more direct impact on the prices of bitcoin after all.