No, Chinese New Year Won’t Trigger a Bitcoin Pullback: Historical Data Shows

Chinese New Year is just around the corner and people are once again debating its possible impact on Bitcoin price. A popular theory is Chinese investors cash out holdings before the holiday, creating additional selling pressure in the market.

The lunar festival, held during different weeks of the Western calendar each year, will mark the beginning of a new year in the traditional calendars of several Asian nations. This year, the event falls on January 25.

Will Chinese New Year Crash Bitcoin Price?

It’s pretty well documented that can impact markets. That is to say certain holidays seem to cause market anomalies. Traders and analysts have studied the effect of winter holidays in the US stock market for years, for example.

Given its global nature, you would not expect to see such anomalies in the Bitcoin market. However, with a lot of its earlier history revolving around China, theories about certain traditional holidays and their impact on price have developed amongst Bitcoiners. From a Western perspective one of the most intriguing of these is the Ghost Festival in August or September. Entrepreneurs are advised not to do business during the period, which, according to superstition, sees the gates of hell opening and spirits unleashed on the earth. Each year, people as to the impact of the festival on the Bitcoin market.

This week it’s another lunar holiday celebrated across East Asia, Chinese (or Lunar) New Year. Typically, traders anticipate selling in the few weeks leading up to the event. The theory goes that holders of Bitcoin cash out some of their investments to fund the revelry going on during celebrations.

Bitcoin price did decrease leading into the Lunar New Year on the years mentioned in the above tweet. However, the drops came much earlier before the event itself.

The New Year is this week. Typically, price declines have occurred between two and four weeks prior to the event. Looking further back in Bitcoin’s history produces results that counter this extremely small sample size too.

As pointed out by economist and trader Alex Krüger below, Bitcoin history suggests that a dump so close to the New Year celebration is now unlikely. In previous years, Bitcoin’s average daily returns in the three weeks immediately preceding the event shows that the digital currency has largely traded sideways.

Related Reading: Is This Why Bitcoin SV Climbed Another 20% In the Last 24 Hours?

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