Bitcoin May Be in a 'Sell in May and Go Away' Phase: Analyst
The markets are seeing red, and it looks like Bitcoin might be following the old Wall Street saying: “Sell in May and go away.”
Mark Wong, Head of Trading at HashKey OTC, discussed the current market sentiment. “What’s interesting is that there’s been no significant technology of yet to build a catalyst. We do feel that sentiment has been basically revolving around most of the same players,” he said.
Recent Trends and Outflows
Earlier this year, the bitcoin ETFs were a big catalyst, pushing bitcoin to a new all-time high. However, CoinShares noted a worrying trend: outflows from US bitcoin ETFs reached $584 million last week, signaling a potential “true correction.”
“We see some dissociation between, for example, bitcoin prices [last] week against the backdrop of soaring stock prices if we look at the S&P. So it does feel as though if there’s a downturn in the overall macro environment… For example, if the [Federal Reserve doesn’t] cut interest rates at the rate that the market wants them to, there may be more pain on the downside,” Wong added.
Mt Gox and Cyclical Movements
News that Mt Gox will start repayments next month adds to the cyclical nature of today’s market. Wong mentions, “He’s currently seeing some profit-taking from early bitcoin adopters, but he also sees buying interest from institutions such as family offices and asset managers.”
Trends Beyond Bitcoin
Beyond Bitcoin, Wong is noticing an interest in thematic coins related to real-world assets and DePIN. He’s also paying attention to airdrops and how these tokens can expand their user base.
“I think memecoins have resulted in quite a decent amount of dilution of value all around, but there will be some that are there to stay,” Wong noted. Those that build a good community and provide “significant entertainment value” show the most promise for longevity.
Market Maturity and Volatility
Wong believes we’re currently in the “eye of the storm” and refutes the notion of having entered a more volatile period. He hints that the market is maturing, which could lead to less volatility. "All around, I believe that the volatility may not have begun yet,” he added. “We haven’t quite seen the 2021 levels of excitement.”
Seasonal Patterns
Given that it’s summer, the classic Wall Street saying “sell in May and go away” may be relevant now. Wong thinks Bitcoin performs better in the fourth quarter, which might be why the market is holding out for better days.
A Positive Outlook
Despite lower levels, there’s still optimism about bitcoin hitting close to $100,000 by the end of the year. While US bitcoin ETFs have been in the spotlight, Wong is positive about their Hong Kong counterparts.
HashKey, in partnership with Bosera, launched both an ether and bitcoin ETF at the end of April.
“There are a number of ETF flows that are related throughout arbitrage so there’s a trade ongoing that people buy for ETFs and sell sort of CME futures, where that volume may be a lot bigger than just pure buy volume. This is a hedge trade so within the Hong Kong side, we have flows coming in around $10 or $15 million US. We feel like it’s very positive, and everything that we are confident and continues to grow in the space,” Wong concluded.
