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It’s Independence Day!

It’s Independence Day!


Bitcoin is traditionally volatile around big national holidays – here’s why.


It’s 4 July, or Independence Day for the US. For Americans, the significance of that is that it’s the anniversary of the day in 1776 when the Second Continental Congress declared that thirteen American colonies were free and no longer subject to British rule. It’s also a kick-ass Will Smith film with Jeff Goldblum. 


For crypto, there’s further significance. Big holidays tend to be times of volatility for bitcoin. While no one knows exactly why, there are some sensible suggestions and it does seem to be an established pattern.


Sell for the holiday

Trading volumes tend to be lower at weekends, when ordinary folk are busy spending time with their families and/or recovering from a hangover. A higher proportion of trading activity at the weekend is bot driven; the orderbooks are thinner and markets can be pushed around more easily. Some traders even exclude weekend data from their charts to filter out this noise. 


The same can be true for holidays. Traders might prefer to close their positions if they’re going to be away from their desks for a while, and it’s safer to be in fiat (as far as they’re concerned). So a dump around many holidays is a common occurrence.


Buy after the break

But holidays also seem to coincide with buying activity – at least, rallies often occur after major holidays. That has been attributed to the effect of people coming together over a meal and talking – something that doesn’t happen so much any more. It’s one of the ways news about bitcoin spreads. And after the holiday, a bunch of new people are interested in crypto and decide that their techie brother or friend could be onto something, so they set up a Coinbase account and buy their first bitcoins. 


In 2017, the post-Thanksgiving rally was attributed to exactly this. Of course, bitcoin was already in its long-term uptrend, but that’s good marketing and helps convince newcomers it’s a good thing.


Bitcoin as financial independence

If you’re celebrating Independence Day, then Happy 4th July from the Inferno team. If not, enjoy the price action that looks set to come for bitcoin. And either way, remember that the day you chose bitcoin was your personal Independence Day.

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