Based on available data, the Bitcoin Santa Claus rally appears unlikely to happen this year as the price of the crypto has fallen to its lowest since November. The seasonal phenomenon where prices surge from Christmas to early January seems to be losing steam as Bitcoin fails to bounce back strongly after a big drop.
The cryptocurrency fell to $92,442 on December 23; down 14.5% from the December high of over $108,000. It briefly got back to $95,000; but is now at $94,000, down over 11% on the week.
December’s Dismal Performance
Historically, Bitcoin and the crypto market have rallied during the holiday season, especially in years leading up to market cycle peaks. For example, Major rallies between Christmas and New Year were the precursor to the 2016 and 2020 bull runs.
The post-Christmas gains happened 8 out of 10 times from 2014 to 2023, between December 27 and January 2, according to reports, with gains from 0.7% to 11.8%.
However, 2021 was an exception: Bitcoin fell 26% from its November peak of $69,000 by Christmas and continued to decline into 2022. The current market downturn raises the question if 2025 – expected to be the next cycle peak year – will follow the traditional 4-year cycle since Bitcoin’s inception.
Drivers Behind Bitcoin’s Decline
Several factors are contributing to Bitcoin’s poor performance this December: Social sentiment for Bitcoin is at a 2024 low on December 22, according to market analytics. Negative sentiment often precedes a price recovery, but for now, it’s just general caution.
The lingering economic uncertainties like inflation and global monetary policies are also weighing investor confidence. Additionally, the correlation with traditional markets has dampened Bitcoin’s potential to move independently.
Again, approximately $18 billion worth of options contracts in Bitcoin and Ether are allegedly expiring on December 27. This kind of event creates very volatile markets as traders rebalance their positions. This can push prices even lower.
Historical Context: Bitcoin Santa Claus Rally Trends
The so-called Bitcoin Santa Claus rally is the seasonal phenomenon where markets (in this case, cryptocurrencies included) tend to rise during the last 5 trading days of December up to the first 2 trading days of January. In bull market years during such a period, in 2016 and 2020, for example, some of the gains were partly due to increased retail and institutional participation in Bitcoin and other assets.
After those peaks, the rally potential has diminished. Not having one in 2021 and the subsequent 2022 bear market only reinforces this point.
Market analysts said the Santa Claus rally is not a guarantee but generally means more optimism in the overall market.
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