If Bitcoin remains in a downtrend by the summer of 2025, it will face the prospect of a fourth consecutive summer loss, while the S&P 500 index, if it continues its winning streak, will record its third consecutive seasonal increase.
From 2020 to 2024, the S&P 500 index recorded positive returns in July and August a total of eight times, while Bitcoin did so six times. Therefore, while their summer trends are not completely decoupled, the divergence in June has become apparent. Since 2020, Bitcoin has only had one June with positive returns, while the S&P 500 index has only had two Junes with declines during the same period.
A closer look at the past few years reveals that Bitcoin's summer slump is less about seasonal patterns and more related to unique shocks and economic trends in the cryptocurrency space, such as China's mining ban, halving cycles, and post-pandemic inflation.
Here are the performances of the past five summers and potential future trends.
In June 2020, Bitcoin fell by 3.18%. However, this figure masks the strong momentum Bitcoin had entering the month. It had just broken the $10,000 mark for the first time since the crash triggered by the COVID-19 pandemic in February. After the halving on May 11, Bitcoin experienced a significant sell-off—a "sell the news" event—that pushed the asset price down to around $5,000.
By July, global stimulus plans and near-zero interest rates boosted appetite for risk assets, driving both stocks and cryptocurrencies higher. The S&P 500 index rose in every month from June to August, while the crypto market benefited from what is now referred to as the "DeFi summer," the first wave of yield farming.
However, 2021 told a different story, as Bitcoin entered the summer facing regulatory uncertainty in one of its largest markets. China intensified its crackdown on Bitcoin mining and trading in May, shaking the network and leading to a comprehensive decline in cryptocurrencies in June.
The involvement of high-profile figures like Elon Musk, Jack Dorsey, and Cathie Wood partially drove a resurgence in momentum in July, with institutional interest noticeably rising. That summer ended with Bitcoin up 8.68%—its last summer with positive returns to date.
The summer of 2022 became the worst-performing period for Bitcoin, while also delivering a severe blow to traditional markets. It all began with the collapse of the Terra ecosystem in May, triggering widespread repercussions across the blockchain industry.
By June, the Celsius platform faced a liquidity crisis, leading to the collapse of the Singapore hedge fund Three Arrows Capital. The U.S. Securities and Exchange Commission further compounded the situation by rejecting Grayscale's application to convert the GBTC trust into a spot Bitcoin ETF.
Meanwhile, U.S. inflation soared to a 40-year high of 9.1%, prompting the Federal Reserve to take aggressive rate hike measures. Consumer confidence, measured by the University of Michigan index, fell to historic lows as investors braced for weak earnings reports in the upcoming second quarter.
However, the performance of tech giants exceeded market expectations, helping the S&P 500 index rebound over 9% in July—marking the best July since major data aggregation platforms like CoinMarketCap began tracking Bitcoin prices in 2013.
But market optimism quickly faded in August following Federal Reserve Chairman Powell's famous speech in Jackson Hole. He warned, "We must maintain our policy stance until the job is done," reiterating the Fed's commitment to continue tightening monetary policy. That summer, Bitcoin and the S&P 500 index fluctuated in sync.
In June 2023, Bitcoin briefly broke its synchronized trend with traditional markets. A wave of ETF applications—especially from BlackRock, which has an almost impeccable record of ETF approvals—drove Bitcoin up 12% that month. In contrast, the S&P 500 index underperformed as the Fed maintained a hawkish stance despite pausing rate hikes, cooling the AI-driven tech stock frenzy from earlier in the year. Strong earnings reports from tech giants subsequently helped the S&P 500 index regain upward momentum in July.
However, both Bitcoin and the stock market ended August with declines. Powell's annual Jackson Hole speech once again dampened expectations for rate cuts, while Chinese real estate giant Evergrande filed for bankruptcy protection. Despite a brief recovery following a U.S. appeals court supporting Grayscale's position in the ETF dispute, Bitcoin still ended the month and the entire summer in negative territory.
In June 2024, Bitcoin prices plummeted significantly due to weak ETF inflows, large-scale sell-offs by miners following the April halving, and pressure from unwinding yen carry trades. In stark contrast, the S&P 500 index steadily rose, driven by optimistic prospects for AI technology and strong performances from large tech stocks, while market confidence in the Fed achieving a soft landing for the economy continued to grow.
By August, Bitcoin faced downward pressure again, primarily due to increased macroeconomic uncertainty, including a slowdown in the Chinese economy and escalating global trade tensions. Despite challenges in traditional markets, the S&P 500 index still managed to close higher, benefiting from the resilience of the tech sector and easing concerns about further tightening by the Fed.
July typically brings strong returns for Bitcoin, as this digital asset often rebounds from a weak June performance. These recoveries usually follow unique downward cycles in the cryptocurrency market, such as post-halving sell-offs, shocks from China's mining ban, and ETF-related market volatility.
For the stock market, July is also a crucial month as companies release their second-quarter earnings reports during this period. Such reports have driven the recent upward trend in the S&P 500 index. Meanwhile, in August, the market will closely monitor the Federal Reserve Chairman's annual speech in Jackson Hole, which typically reveals the Fed's stance on interest rate policy.
This year, against the backdrop of escalating tensions in the Middle East and conflict between Israel and Iran, investors are also closely monitoring oil prices and inflation data. Following a U.S. airstrike on Iran on June 23, Tehran threatened to block the Strait of Hormuz, a key global oil passage. The ceasefire agreement brokered by U.S. President Trump has already broken down, with both sides accusing each other of violating the terms. As of the time of writing, Trump has warned Israel not to carry out its threat of a "strong strike" against Iran.
Experts point out that these geopolitical developments could push inflation levels higher, thereby affecting risk sentiment across major markets.
Despite Bitcoin becoming increasingly intertwined with traditional markets through ETFs, corporate treasuries, and institutional capital flows, this digital asset remains particularly sensitive to shocks within the cryptocurrency ecosystem.
Unlike stocks, which often move in sync with corporate earnings, interest rate expectations, and broader macroeconomic trends, the cryptocurrency market still exhibits disproportionate reactions to its internal catalytic factors. This is why investment strategies like "sell in May" do not always translate effectively across different asset classes. Market analysts emphasize that even as the cryptocurrency market matures, its most severe downturns still primarily stem from internal industry issues.
Related: SoFi Digital Bank Relaunches Cryptocurrency Services After 2-Year Interruption
Original article: “June Remains a Danger Zone for Bitcoin (BTC) as S&P 500 Aims for Summer Rally”
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