The World Cup is here, are your brews and snacks ready? But those holding positions might not be laughing—because that 'World Cup curse' is looking a bit spooky based on the data.
In the past 19 World Cups, the S&P 500 has dropped 11 times, averaging a loss of 1.5% to 2%. The A-shares fared worse, with 5 drops out of 7 tournaments, including a 7% drop in 2018. Bitcoin didn't escape either: it dropped 7% during the 2014 Brazil World Cup and 16.5% during the 2018 Russia World Cup.
But if you dig deeper, there's a pretty boring reason behind this curse: the World Cup happens in June-July, and there's an old saying in the stock market: 'Sell in May and go away.' These months are usually the slowest trading times of the year; fund managers are on vacation, liquidity is poor, and any slight breeze can cause drops. In 2022, the Qatar tournament was moved to winter, and trading volume noticeably decreased—indicating that it's not football's fault, it's the season's fault.
Looking at Bitcoin's past 'predictions': 2014 was during a bear market post-Mengtou River bankruptcy, 2018 was marked by the collapse of the ICO bubble and tightening regulations, and 2022 was the FTX blow-up—each of these had a much bigger impact than the World Cup itself.
So, the curse might exist, but don’t take it too seriously. If you're looking to hedge, historical data shows that the most 'natural' strategy is to short before the tournament starts—but you’ll need to handle the emotional volatility.
Instead of staring at the charts, I’d say this month is better spent enjoying the matches. After all, it happens once every four years, while the candlesticks will be back tomorrow.
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