Bitcoin has dropped to its lowest price since late October, undermining hopes for a 'Santa Claus rally' that had previously brought substantial gains during the holiday season before previous market cycle peaks.
Bitcoin (BTC) fell to $92,442 in the last trading session on December 23, its lowest price in four weeks, marking a 14.5% correction from its peak of over $108,000 on December 17.
It briefly recovered to $95K before falling back to $94K in early trading on December 24 and is currently holding a decline of over 11% in the past week.
The cryptocurrency market often performs well during the holiday season when the market is bullish, but Bitcoin's dismal performance in December has dampened hopes for a Santa Claus rally, which is the price increase in the last five trading days of December and the first two trading days of January.
However, cryptocurrency trader 'Mister Crypto' compared Bitcoin's performance from previous years and found significant rallies between Christmas and New Year in 2016 and 2020, years before market cycles peaked.
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Performance of the cryptocurrency market in previous cycles. Source: Mister Crypto
A study from CoinGecko published on December 13 revealed that from 2014 to 2023, the cryptocurrency market has witnessed a 'Santa Claus rally' eight out of ten times after Christmas, with total cryptocurrency market capitalization increasing from 0.7% to 11.8% during the week from December 27 to January 2.
Reviving Santa Claus in previous years. Source: CoinGecko
There was no Santa Claus rally after the peak of the 2021 cycle when BTC dropped about 26% from its high of $69,000 on Christmas and continued to decline throughout 2022.
The difference is that 2021 was the peak cycle year, while 2025 is expected to be the peak cycle year currently, according to the four-year pattern that has occurred since Bitcoin's inception.
The cryptocurrency market may experience volatility on December 27 as approximately $18 billion in Bitcoin and Ether (ETH) options expire.
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Bitcoin social sentiment hit a yearly low on December 22, which could signal an upcoming recovery.
