One could be tempted to believe that the climb in the price of Bitcoin (BTC) to $30,000 was gradual and constant. The truth, however, is quite another. According to data from a research by J.P. Morgan Asset Management, just nine important trading days were responsible for 90% of Bitcoin’s rise since the start of 2023. The market steadily retracted after growing in steps for the majority of the 200 trading days.
It’s not a novel idea, and it holds true in other markets as well, that a small number of “best days” account for the majority of an asset’s gain. An investor who made investments in the S&P500 index from 1999 to 2018 would, for instance, have received an average yearly return of 5.62%. The annual return would, however, fall to 2.01% if the investor missed the 10 greatest trading days during this time.
Even more stunning results are obtained when more of the best-performing days are missed. The identical investor’s annual return would become negative at -0.33% if they missed the 20 finest trading days. The return would drop to -1.97% if they missed the 30 best days, and to -3.35% if they missed the 40 greatest days. They would have had a dismal -4.45% yearly return if they had missed the top 50 trading days.
This information supports a cliche in the financial industry that states, “Time in the market is more important than timing the market.” Those who try to timing the market by buying low and selling high frequently lose out on the finest trading opportunities. However, those that invest for a longer period of time are more likely to see significant returns.
This implies that while most trading days may appear unremarkable in the context of Bitcoin, a few crucial days might have a significant influence on investment results. Therefore, Bitcoin’s rise to $30,000 may not be as easy as one may assume, but the cryptocurrency market will ultimately value those days of price explosion.
