What Was the Force Behind Bitcoin’s Rally Yesterday? Analysts Point to China

Bitcoin recently attracted attention with its rise to $ 50,000. This significant jump came as no surprise to investors who have observed a recurring seasonal effect in the cryptocurrency market: Bitcoin tends to rise during the Lunar New Year period, when trading volume is generally lower.

The decline in transaction volume is largely attributed to the Lunar New Year holidays, a time when many people in the Asia Pacific region travel and attend festive events with their loved ones. Interestingly, Bitcoin reached the $50,000 level on February 12, just two days after the New Year officially started. Celebrations often last for a week or longer, coinciding with Bitcoin’s price increase.

Shiliang Tang, President of major trading firm Arbelos Markets, noted that Bitcoin has historically trended upward around the Lunar New Year. “There is some seasonality behind the price movement,” Tang said. He also noted that the tradition of gifting money during the Lunar New Year could contribute to more positive market sentiment.

However, it is important to remember that smaller volume trades can lead to more significant price fluctuations in both directions. CCData, a leading data analysis firm, observed that January trading volume was inflated by the excitement around Bitcoin ETFs, but was still lower compared to the historical average.

CCData Research Leader Joshua de Vos stated that the average daily volume since January 2021 has been around $198 billion. However, volume during the Lunar New Year holidays was significantly lower compared to the rest of the year. “These data support the thesis that Lunar New Year significantly reduces average daily volumes,” De Vos said.

*This is not investment advice.

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