The “bunny dip” refers to a drop in cryptocurrency prices that often occurs around the Easter holiday. The term originated from the frequent crashes and volatility seen in the cryptocurrency markets, likening the sudden price declines to the hopping motion of a bunny. While the exact reasons behind the bunny dip are unclear, a few theories exist as to what causes this seasonal slump.
Theories Behind the Bunny Dip
| Theory 1 | Investors cash out to afford Easter expenses |
| Theory 2 | Lower trading volumes around holidays |
| Theory 3 | Self-fulfilling prophecy – investors expect a dip |
One idea is that investors withdraw their cryptocurrency around Easter to afford gifts, candy, meals, travel, and other holiday-related expenses. This increased selling pressure could then cause prices to decline. With investors distracted by family gatherings and holidays, trading volumes may also naturally decline, allowing for larger price swings.
Some also suggest that the bunny dip is partly a self-fulfilling prophecy. If enough investors expect prices to fall around Easter and sell their holdings preemptively, it can snowball into a larger crash. The seasonal slump ends up confirming fears of a holiday plunge.
Historical Bunny Dips
While not occurring every year, significant crashes around Easter have happened multiple times in the history of the cryptocurrency markets:
2013 – Bitcoin Falls from $260 to $130
In 2013, the first notable bunny dip saw bitcoin fall over 50% from $260 to $130 between March 28 and April 3. This erased the gains from the previous month, coinciding with the widespread use of trading bots on the Mt. Gox exchange.
2017 – Bitcoin Drops from $1,250 to Below $1,000
Leading into the 2017 Easter holiday weekend, bitcoin had reached new all-time highs over $1,250. Over the holiday, it declined below $1,000, representing a drop of nearly 20%. Other major cryptocurrencies like Ethereum also saw significant declines.
2021 – Coinbase Debut Leads to $400 Billion Market Crash
In 2021, the crypto market saw a bunny dip of over $400 billion between Coinbase’s stock market debut on April 14 and the Easter weekend. Bitcoin fell from over $64,500 to under $52,000 during this period. Some speculate that Coinbase insiders may have sold holdings to take profits after the public listing.
Stats on Bunny Dips
While not all Easter weekends result in crypto declines, on average the numbers point to typical slumps:
| Average BTC Price Drop on Easter Week | 5-10% |
| Average ETH Price Drop on Easter Week | 5-15% |
| Biggest Recorded Dip | Over 50% BTC crash in 2013 |
According to an Arcane Research report, bitcoin prices have fallen by an average of 10% in the seven days leading up to Easter since 2013. Ethereum has seen average declines of 15%. The biggest crash was in 2013 with over a 50% plunge, while the smallest was around a 2% drop in 2016.
2022 Bunny Dip
Most recently in 2022, a minor bunny dip saw bitcoin fall from around $45,000 to under $40,000 between April 11 and April 18. However, it quickly rebounded to prior levels after Easter, limiting the depth and duration of the slump. Other major cryptocurrencies like Ethereum recorded similar price action.
Possible Explanations
A few hypotheses exist for why these seasonal slides around Easter may occur:
Investor Distraction
– Holiday weekends mean less trading and investor attention on markets
– People focused on family, travel, and festivities
– Lower volumes can exacerbate volatility
Profit Taking
– Investors cash out holdings to afford holiday expenses and gifts
– Selling pressure drives prices down temporarily
– Coinbase insiders possibly took profits after 2021 public listing
Self-Fulfilling Prophecy
– Investors anticipate a dip and proactively sell coins beforehand
– The mass sell-off ends up causing the expected drop
– Self-reinforcing cycle validates fears of a crash
How to Trade the Bunny Dip
For traders, the predictable bunny dip presents both risks and opportunities. Here are some approaches to consider:
Sell Before the Holiday
– If expecting a dip, traders may sell coins ahead of time
– Lets them avoid losses and keep profits
– Risk missing out if prices continue rising
Short Sell Before the Holiday
– More advanced traders can short sell cryptocurrencies
– Allows them to potentially profit from falling prices
– Requires leveraged trading platform and experience with shorting
Buy the Dip
– For long-term investors, the dip provides a discount
– Chance to buy coins at lower prices
– Requires having enough cash reserves on hand to make purchases
Avoid Overtrading
– The dip historically recovers shortly after Easter
– No need to panic or make rash trading decisions
– Often better to hold through minor volatility
The Future of the Bunny Dip
Looking ahead, it remains to be seen whether the bunny dip will persist as a seasonal cryptocurrency trend. As the markets mature and stabilize over time, these holiday crashes may become less pronounced. However, the inherent volatility makes cryptocurrencies susceptible to temporary shocks around major events and holidays. While the cycles of fear, euphoria, and panic still occur, investors can deploy smart trading strategies around these dips. An opportunity for both profit-taking and discounted buys, the bunny dip tests traders but also provides valuable learning experiences in navigating market swings.
Conclusion
In summary, the “bunny dip” refers to the tendency for cryptocurrency prices like Bitcoin and Ethereum to decline around Easter. While not occurring every year, significant crashes have coincided with Easter weekend several times, with an average drop of 10-15% based on historical data. Explanations for this seasonal slump include investors cashing out holdings for the holiday, decreased trading volumes, and self-fulfilling expectations of a dip. For traders, these predictable dips present ways to either avoid losses or profit from the volatility through short selling or buying the discounted dip. As the cryptocurrency markets mature, the magnitude of these bunny dips may decrease but remain an anticipated part of the trading calendar.