As the month is drawing to a close, it may end up being the 3rd best January ever for #bitcoin (“BTC”). The “digital gold” is up 43% outperforming any other major asset classes (see chart). After a difficult 2022 is the worst behind for #btc ? Hard to say but it may be interesting to look back in history and see what the January performance may foretell for the rest of the year.

BTC has had a positive return in January for 8 out of 13 years of its existence with an 18% average gain. A positive January is typically followed by a positive year with a whopping average 1026% annual return. The only instance of a positive January leading to a negative year was 2014 on the heels of the failure of the then-systemic exchange Mt Gox. In 2014 January’s return was 10% while the year ended up a negative 58%.

It is key to emphasize that past performance is in non way guarantee of future results and a variety of macro and sector-specific events may spell more decline ahead for BTC. Further tightening of financial conditions or extreme regulation scenarios for example, may come to bear heavily on prices and even drive BTC below the recent $15,800 low.

Yet the long term investment case for the non-sovereign, hard-capped, self-custodial digital store of value has never looked stronger. As global investors come to terms with the inevitability of currency debasement and historically elevated sovereign instability, allocation to store of value assets is likely to rise as a way to manage risk in highly uncertain times.

The recent strong price action for #gold, an asset class seven times larger than BTC, may be a sign of things to come. Up almost 20% from its recent low, the price of the yellow metal has dramatically decoupled from real rates (https://bit.ly/3WwVkSD), hence signaling accumulation by actors, such as central banks, willing to incur carrying costs in exchange for the non-sovereign quality of gold. As opined last September (https://bit.ly/3R8R4Yr), over the long term the shift in BTC’s demand from “speculators” to “allocators” coupled with the extreme paucity of supply should continue to drive prices higher. After all, it is not an accident that, in spite of the widest variety of challenges, BTC’s average annual return over 13 years has been in excess of 150%.

Disclosure: Not investment advice. Do your own research. Hold all assets mentioned. Twitter @pietroventani for more timely comments and updates

chart, bar chart