September is usually rough for crypto. October is a different story

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There's a common disclosure often snuck in the fine print of any investing pamphlet: Past performance is not indicative of future results.

It stems from SEC Rule 156, which is meant to prevent any investing prospectus from misleading investors into thinking there's anything that resembles a "sure thing" based on prior returns.

But, as humans, basing our decisions off of the past is usually a very common practice. In fact, you could make the argument that we've evolved as humans solely based on performance over a very long time horizon. And when it comes to investing, an average historical return certainly can be calculated whether it's real estate, a car, stocks, or yes, even crypto.

Of course, as I described last week, the danger is that there isn't nearly as much data to go off in crypto. Home prices might double, on average, every 13 years, but even that historical average has been thrown off in the latest low-interest rate environment and pandemic. Digital assets are no different — and are now also grappling with a potential shock as interest rates rise and all risk assets are re-priced.

Source: Getty Images

But, if one were to look at the relatively scant data on bitcoin's monthly performance since it hit size, there would be a stark difference in returns for the two months we're about to turn the pages on. Again, it's early in bitcoin's history relative to almost any other asset imaginable, and I'd be required to mention again that prior returns can't be extrapolated to future performance, but we're only human.

According to data crunched by Coinglass via Fundstrat, bitcoin's historical monthly returns for September are way worse than October's performance. In fact, bitcoin has averaged a 7% decline in the month of September, versus October's average gain of about 28%.

(Source: Coinglass via Fundstrat)

(Source: Coinglass via Fundstrat)

Again, it would be necessary to point out another huge grain of salt — not just that past performance doesn't indicate future results — but also that a lot of the reason why everything is selling off, the Fed's response to inflationary pressures with rate hike after rate hike, has not necessarily abated. Until the broader market rout caused by a more hawkish Fed starts to show signs of turning it could be hasty to jump in solely based off a rosy history of bitcoin's past Octobers.

That said, would anyone actually blame you for making a decision based on historical performance? Me thinks not.

Let's see how the data stack up this time. Bitcoin is pacing to be off by about 0.1% for the month of September this year. What will October hold?

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