• Altcoins have been showing signs of recovery after suffering a nearly 90% drawdown in most assets.
• Gains from many top altcoins have been reminiscent of the previous bull market in Bitcoin and other coins.
• This could be due to a calendar-based phenomenon called the January effect.
The crypto market has been going through a tough time, with most altcoins suffering a devastating drawdown of over 90%. However, signs of a potential recovery have started to show recently, as altcoins have been posting returns reminiscent of the previous bull market in Bitcoin and other coins. One possible explanation for this is a calendar-based phenomenon known as the January effect.
The January effect is a calendar-based phenomenon that takes place during the month of January and is characterized by a surge in securities prices. This phenomenon is not exclusive to the crypto market and is also present in the traditional financial markets, where it is joined by other calendar effects such as “sell in May and go away”, the Halloween effect, the July effect, and the Santa Claus rally.
GALA, for example, has surged by 138% over the last week, while Lido DAO has seen gains of 61%. Dozens of altcoins have posted returns of over 20% in the same timeframe, and even those caught up in the FTX-related fallout have seen their largest monthly bullish candle since August 2021.
The January effect could be one of the reasons behind the strong performance of altcoins relative to Bitcoin and Ethereum, which have seen returns of 5-10% in the same timeframe. The crypto market’s future performance could depend on whether this effect is able to continue in the months ahead. If it does, then the chances of a full recovery for the crypto market could be much higher. Therefore, the January effect could be one of the key drivers of the crypto market in the coming months.