The global marketplace teems with a myriad of investment opportunities from traditional precious metals to the more recent, Bitcoin. To enhance your investment portfolio, understanding seasonal trends of these markets should be a priority.
Seasonal trends refer to predictable fluctuations in markets that occur regularly within a calendar year, usually linked with seasonal factors. Summer and year-end are particularly notable periods that investors keenly observe for trends that can help shape their investment strategies.
For Precious Metals:
During the summer, the precious metals market typically experiences a lull, usually referred to as the summer doldrums. This period is generally marked by lackadaisical trading and lower market volumes often resulting in depressed prices. Experts attribute this to various factors including a slowdown in manufacturing demands, a decrease in central bank activity and, interestingly enough, the vacation season in the Western hemisphere leading to less active trading.
However, this downtime offers lucrative opportunities for forward-thinking investors as they can acquire these assets at lower prices before reselling once the market picks up.
As fall approaches and the manufacturing sector increases its production activities in preparation for the year-end demand, central banks diversify their foreign exchange reserves and investors return from holidays, the demand for precious metals rises. This, in turn, drives up the prices and kick-starts a surge that often extends towards the end of the year.
For Bitcoin:
Bitcoin, unlike precious metals, lacks a long historical track record and procures a distinct seasonal trend. Just like precious metals, Bitcoin also experiences summer doldrums, notably July has been the worst performing month for Bitcoin in the past decade. The declining prices and reduced trading volumes during the summertime can be attributed to the vacation effect, where investors are away and not trading as actively.
The second half of the year, particularly the last quarter, often sees an upswing in Bitcoin value. This is usually due to an increasing number of investors seeking to buy Bitcoin for various reasons, including to hedge against uncertain economic conditions or to speculate on potential price hikes. Recent observations have particularly noted a trend in Bitcoin’s price peaking around mid-December. Demand factors, year-end bonuses, and increased public interest are potential contributing factors to this ‘year-end surge.’
The knowledge of these seasonal trends empowers investors, enabling them to make informed decisions, optimize their investments and ultimately, profit from the market movements. By buying assets during the summer doldrums — when prices are often at their lowest — and selling during the year-end surge
