April is another big month for Bitcoin

1) Last week, we expected US stocks to rally strongly as quarter-end buying of Fund managers would lift prices higher. Indeed the SP500 rallied +3.5%, and tech shares have reached the highest since August 2022.

2) Bitcoin prices rallied only by +1% as the CFTC started legal actions against Binance, and the US government announced that they would sell another 40k Bitcoins from a law enforcement action eighteen months ago. Those two factors are minor overhangs for the crypto market now.

3) As readers will know, we are huge fans of statistics and probability models (which have called various rallies, such as the Chinese New Year rally, the January effect etc.).

4) April is the second strongest month for US stocks with the SP500 finishing +2.6%, on average, and 8 out of 10 times, the index has shown positive returns in April. The probability favors long stocks.

5) While more volatile, Bitcoin has returned +17% on average during the last ten years in April, with April being the best month during the first half of the year but only the third-best month for the entire year. Nevertheless, Bitcoin has been up 6 out of 10 times in April.

6) Historically, November and October were the best months, while the November returns were dominated by an astronomical return in 2013.

7) Ethereum shows the most substantial returns for the year in April, with +46% average monthly returns and four of five Aprils Ethereum prices up. Prices could rally with the Shanghai upgrade, likely to increase the amount of staked ETH.

8) Some people still expect ETH withdrawals after the upgrade, but as most of the staked ETH is at higher prices and because only 14% of ETH is staked (vs. 58% for other Layer1), we do not expect prices to drop.

9) So, in a nutshell, our BIG thesis for 2023 is that inflation will decline this year is playing out. All risk assets should rally. The recent bull rally in US stocks should have positive spillover effects for crypto as well – especially since we are now entering the month of April which has been strong for US stocks (SP500 +2.6%, Nasdaq +2.9%), Bitcoin +17%, and Ethereum +46%.

10) Pick your poison.