The traditional belief that stocks underperform from May to October has lost its reliability, signaling a shift in market dynamics.
Historical data from Bloomberg Intelligence reveals that the S&P 500 ETF finished positively during this period in 25 out of the last 33 years. In contrast, the November-April timeframe yielded a cumulative return of roughly 731%, compared to just about 171% for May-October since its inception in 1993.
This shift suggests the old adage that equates May with selling is becoming obsolete. Traditionally, this period was marked by slower corporate earnings and reduced trading activity, prompting investors to move towards cash or bonds until autumn.
Institutional money has historically moved in predictable patterns, but Bitcoin now taps directly into these traditional portfolio flows. Data from Farside Investors indicates that U.S. spot Bitcoin ETFs attracted approximately $1.5 billion between April 17 and 24, with net inflows reaching around $58.3 billion.
This integration of Bitcoin into the broader risk appetite framework previously reserved for equities means it no longer faces the same seasonal risks. The Federal Reserve has noted that crypto ETP bid-ask spreads are on par with equity ETFs, highlighting their interconnectedness.
Bitcoin’s performance over the next six weeks will hinge on critical data releases. Key events include the Fed’s April 28-29 meeting and subsequent press conference by Chair Jerome Powell, along with GDP and PCE reports scheduled for release shortly after.
Market analysts will closely watch these indicators to determine whether growth is slowing or heading towards stagflation, and if inflation trends justify easing expectations. A supportive macro environment could maintain Bitcoin’s range between $72,000 and $85,000 into June.
However, should key economic metrics like April CPI or payrolls deviate from forecasts, this might reignite the ‘Sell in May’ mentality by tightening financial conditions and affecting liquidity.
The Philadelphia Fed’s Anxious Index suggests a 20.9% probability of GDP contraction in Q2, keeping recession risks on the radar. If inflation remains stubborn while growth falters, the Fed could face a stagflation dilemma that impacts all asset classes.
As Bitcoin becomes more integrated into Wall Street’s infrastructure, it inherits both its opportunities and challenges. The coming weeks will test if Bitcoin can sustain its rally amidst fluctuating macroeconomic conditions.