Bitcoin's May Decline Triggers Seasonal Signal: Historical Model Points to ~10% Short-Term Correction Risk

Odaily Planet Daily News Bitcoin has continued to weaken this month, retreating after encountering resistance near the $83,000 level. It is currently heading towards a negative close for May, which the market views as the classic "Sell in May and go away" seasonal signal reappearing. Historical data shows that after Bitcoin experiences a "Red May" (negative monthly return), the average return over the following 1 month is approximately -10%, and over 3 months is about -3.3%, usually indicating continued short-term weakness. Based on historical averages, the price could potentially fall back to the $68,200 range.

However, medium to long-term performance shows a clear divergence. Data indicates that the average gain over the 6 months following a Red May can be approximately +139% (influenced by the extreme market conditions of 2013). Excluding outlier years, it is still around +12.9%, suggesting that the long-term trend has not been broken by this seasonal signal.

Analysts point out that a "Red May" occurring within a bear market structure is often more damaging. For instance, in 2018 and 2022, the subsequent 1-month average decline was 26%, and the cumulative 6-month decline approached 46%. If BTC falls below $76,000, it would strengthen the assessment of risk that it is entering a bear market structure. Currently, Bitcoin is still trading near approximately $75,000, remaining above the key cyclical support level of about $60,000, and the overall market remains in a phase of divergence between bulls and bears. (Cointelegraph)