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Bitcoin: Seasonality & Trading Strategy

This is quite literally the worst month for bitcoin, seasonality-wise.

This box plot from Kraken Intelligence should make bitcoin bulls pause. Granted, the data is only until Oct 2022 (when they stopped putting out their free publication - budget cuts right at the market bottom) but it shows that bitcoin is seasonally weak in March, coming off 5 good months.

Seasonality isn't 100%. The Nasdaq was seasonally weak in February but ended up hitting ATHs on a near daily basis. And bitcoin bucked the seasonal trend last March during a bear market.

The level of bullishness on FinTwit, the parabolic price movement, the high perpetual futures funding cost, and the utter disregard for risk - in combination with seasonality - indicate this is the time to stay on the sidelines (or at the very least, to cash out a lot and enjoy the 20% USDT yield on Binance).

The worst drawdowns always come at the tail end of a huge win streak. Complacency is dangerous to your net worth.

Here's a zero-emotion bitcoin exit strategy: 3-ATR stop at $61k or a parabolic stop and reverse [stop] at $55.5k. Closing price reversal (unconfirmed) on a massive outside day is bearish no matter how you slice it. The seasonality doesn't help either.

It doesn't matter whether or not you believe in TA - it matters that others do, and they are a part of the market.

Good Trading!

Kashyap Sriram

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