September has historically been a challenging month for digital assets. As shown in the table below, the average return for September has been a negative 4%. (Though, to be fair, August hasn't been much better—especially this year—but let's not dwell on that.) So, what should we do? Is Bitcoin "dead" for the thousandth time? Should we cash out and abandon the revolution that digital assets are driving?
Figure 1: Monthly Bitcoin returns since 2013
In the table, kindly provided by Young Platform, we can see that after September, the returns on digital assets historically improve, particularly from October through March/April. It's a reminder that investing when the market is down can lead to better long-term gains. However, emotions like fear often push us to sell at the wrong time, possibly even at a loss.
At Diaman Partners, we have always relied on quantitative models to guide entry and exit points in financial markets, eliminating emotions from the investment process. Emotions, as we know, often increase the risk of poor decisions. Unlike other analysts who claim that market timing doesn't matter, we recognize how crucial it is to enter the market at the right moment.
Investing at the right time can deliver significantly better results than waiting for confirmation after the market has already started to recover. With this in mind, we simulated the outcomes for investors who entered during periods of market distress, compared to those who waited for one or even two signals of market recovery. To simplify our analysis, we used September 15, October 15, and November 15 of 2016 as our entry points—shortly after a Bitcoin halving, similar to the period we're experiencing now.
Figure 2: Buying Bitcoin – Dark Blue: November, Light Blue: September
While the graph suggests that investing in any of these months may not show drastic differences at first glance, the raw numbers tell a different story.
Figure 3: Returns based on investment timing in 2016
Earning 3,100% versus 2,600% just by investing two months earlier is a substantial difference—a worthwhile risk premium for entering the market when conditions were less favorable, wouldn’t you agree? Is this an anomaly? We think not. The same pattern appeared in 2020, when Bitcoin initially struggled after its halving. In that case, too, investing in September yielded much better results than waiting for the following months.
Figure 4: 2020 Bitcoin returns based on month of purchase
Though the returns in 2020 were lower than in 2016, this is to be expected. Doubling an asset valued at $10 billion is very different from doubling one valued at $1 trillion or more, as is the case today.
Figure 5: Bitcoin purchases across different months – Dark Blue: November, Light Blue: September
Once again, the graphs show a difference, though perhaps not as striking as the numbers themselves.
In conclusion, we can’t guarantee that Bitcoin’s cycle will repeat itself or that it will double or triple in value over the next 12 months. However, we believe now is an excellent time to invest. Don’t wait too long!
Let us know in the comments if you’ll be entering the market this September or if you prefer to wait for more signals—after all, we’re only human.
Comments