The Lunar New Year and Its Impact on Crypto: Reflections on the Year of the Dragon
As East Asia readies itself to celebrate the Lunar New Year and welcomes the Year of the Snake, it’s an opportune moment to reflect on the performance of bitcoin (BTC) and the CoinDesk 20 (CD20) during the preceding Year of the Dragon. This annual tradition, particularly highlighted by Hong Kong-based brokerage CLSA, forecasts market trends in alignment with the lunar cycle. Interestingly, the principles that apply to traditional markets also extend to the realm of cryptocurrency.
Looking back over the past year, it appears that the market analysts were remarkably accurate in their predictions. Bitcoin has soared by 137%, while the CoinDesk 20 index, which tracks the largest digital assets, has experienced an impressive 128% increase. This substantial crypto rally can largely be attributed to the election of U.S. President Donald Trump last November, which coincided with predictions of market volatility followed by a rally in the latter half of the year.
However, there was one notable area where market forecasters fell short last year: the performance of ether (ETH). With expectations riding high due to the anticipated launch of ether exchange-traded funds (ETFs) and the Dencun upgrade to the Ethereum protocol, analysts believed that the dragon’s energy would fuel a significant rise in the second-largest digital asset. Unfortunately, this did not materialize, and ETH has only managed a modest 35% increase over the past year, struggling to keep pace with the broader market gains.
Now, as we transition into the Year of the Snake, CLSA predicts that the market will encounter a series of unpredictable twists and turns as both traditional and crypto assets navigate through the lunar months ahead. The year kicks off with a sense of cautious optimism, akin to the Rough Green Snake as it scales trees to obtain a better perspective on its surroundings.
However, this initial optimism is tempered by a youthful volatility, reminiscent of the Garter Snake testing its boundaries, resulting in temporary declines in the early spring. By mid-year, the passionate energy associated with the Brown Tree Snake suggests the potential for a significant surge, propelling markets to heights that have not been witnessed in some time.
As summer progresses, the stars predict a period of stagnation, followed by minor setbacks in autumn. Yet, as we approach the end of the year, a renewed momentum is expected, highlighting the resilience and adaptability of the crypto market amid ongoing volatility.
It’s essential to note that while CLSA offers this celestial guidance, they also advise investors to seek professional financial advice rather than relying solely on astrological predictions. Their forecasts, rooted in a blend of market analysis and lunar insights, should not be considered a formal research report.
