How Does Chinese New Year Affect Cryptocurrency?
The 2025 Chinese New Year, starting this year on 29 January, is more than just a celebration - it’s a force that can ripple through the crypto markets. With eight days of rest in Asia's largest economy, this annual pause often reshapes trading dynamics.
But how exactly does this holiday impact the price of Bitcoin and other digital assets? The answer lies in the unique mix of cultural traditions, financial habits, and market liquidity.
What Is the Chinese New Year and How Does it Impact the Crypto Market?
The Chinese New Year - also called the Lunar New Year and the Spring Festival - is a festival in China celebrating the start of the new year on the traditional lunisolar Chinese calendar. Set to take place between January 29 and February 2, 2025, it is also the longest public holiday in the Asian nation, granting workers eight days off (from January 28 to February 4).
Despite the government's ban, China currently has the second-largest population of cryptocurrency holders, with an estimated 59.1 million people, or 4% of the nation's citizens, owning digital assets in 2023. Since these people prepare for family gatherings, gift-giving, and celebrations for the Chinese New Year, they often sell some of their crypto to cover their expenses prior to the holiday.
Source: 10x Research
Consequently, crypto prices tend to fall in the few weeks leading to the Chinese New Year. However, as the market returns to normal trading activity, a recovery occurs following the celebrations, often resulting in double-digit returns for investors. According to 10x Research, if you bought BTC three days before and sold it 10 days after the Chinese New Year, you could expect an average return on investment (ROI) of 11% based on historical data recorded between 2015 and 2023.
Moreover, at this time of the year, many Chinese cryptocurrency investors and traders take a break from the market to spend time with their loved ones. This often leads to reduced trading volumes and lower price volatility until the end of the celebrations.
Crypto Chinese New Year Chart: What Happened With Bitcoin Prices During 2024?
To assess the potential impacts of the Chinese New Year on crypto, let's see what happened with Bitcoin prices in 2024 in the holiday that took place that year between February 9 and 17.
Source: CoinGecko
As you can see in the chart above, Bitcoin started 2024 at the price of $42,261, which briefly increased to $48,494 by January 11 before taking a downturn and falling to as low as $38,678 by January 23, potentially as a consequence of the pre-Chinese New Year selloff. After a surge to $42,690 by February 6 (three days before the event), BTC's value rose significantly to $56,650 by February 27 (10 days after the celebration).
In conclusion:
BTC's price took a significant 20% hit a little more than two weeks prior to the start of the Chinese New Year.
Bitcoin recovered from the pre-festival fall, with its price surging by 33% between February 6 and February 27. Even if we disregard the drop before the festival and compare prices between January 11 and February 27 instead, BTC still recorded a 17% growth.
There was a noticeable drop in trading volume during the event, especially between February 9 and February 13.
Crypto Chinese New Year Prediction 2025: How Will the Festival Impact Digital Asset Prices?
While the Chinese New Year has historically influenced crypto markets, leading to pre-holiday selloffs, post-festival recoveries, and a decrease in trading activity, the patterns aren't set in stone.
As 2025 approaches, will history repeat itself, or will changing global dynamics bring new surprises for Bitcoin and digital assets? One thing is clear: for crypto traders and investors, the Chinese New Year remains a key period to watch, not just for its traditions but for its potential impact on the cryptocurrency space.
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate. VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).
Disclaimer: Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
