10 months ago • 1 min
Bitcoin blasted 39.8% higher in January – its best start to a year in a decade. Only in its really early years did it see a better first month to the year, with gains of 83.4% in 2011 and 51.4% in 2013, according to data from Glassnode. So the question is, does a good January suggest a good year ahead for the OG crypto?
In the 12 years since 2011, bitcoin has seen price gains in seven Januaries. And six of those times, it was followed by much higher returns for the rest of the year. And, sure, that’s a decent average, but from a statistical perspective, it’s still a bit thin. Typically, you’d want to see a sample size of at least 30 years before you start drawing any meaningful conclusions. In other words, there’s not enough evidence to suggest that the good start to this year implies an overall good year ahead.
Instead, if you’re trying to get a read on how last month’s price action might influence what bitcoin does over the coming months, a simple study of its monthly candles (red and green bars) might offer some insight. As you can see, bitcoin’s gains last month (blue circle) engulfed the four months of downward chop that came before it – it’s what technical analysts would interpret as a type of “bullish reversal candle”. Keep in mind these are monthly candles, so they look to capture longer-term shifts in investor behavior. As for what bitcoin does later Wednesday when the Federal Reserve makes its latest interest rate announcement, your guess is as good as mine.
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