Bitcoin has been having a hard time lately. With the price falling to $92,442, a 14.5% drop from the all-time high of $108,000, many are wondering if the long-awaited “Santa Claus rally” will happen this year. While Bitcoin has shown some recovery to around $94,000, it is still down over 11% over the past week. Will the holiday season bring the boost we’re hoping for, or is this a sign of things to come?
The Santa Claus Rally: will it appear?
In the past, crypto markets have typically performed well during the holidays, especially in the years just before market peaks. For example, 2016 and 2020 saw some solid rallies just before crypto prices hit their all-time highs. A study of Coin gecko in fact, shows that crypto markets recovered after Christmas 8 out of 10 times between 2014 and 2023. On average, market capitalizations rose between 0.7% and 11.8% from December 27 to January 2. So people naturally look forward to the Sinterklaas Rally for some cheer.
But not every year goes like this. For example, in 2021, Bitcoin had already fallen 26% on Christmas Day and this decline continued in 2022. Yet many still expect 2025 to be a big year for Bitcoin, following the usual four-year market cycle.
What happens now?
While Bitcoin’s price drop isn’t quite what people expect from a Sinterklaas rally, there are a few things coming that could shake things up. About $18 billion worth of Bitcoin and Ether options contracts will expire around December 27. This could cause serious volatility, potentially leading to a change in the price of Bitcoin. Bitcoin social sentiment also fell to its lowest point of the year in late December. This could mean that recovery is on the horizon.
In terms of past performance, Bitcoin’s moves around Christmas have been all over the place. Some years it rose, while in other years it fell. Looking at December as a whole, Bitcoin has achieved a decent average return. On average, betting on the entire month of December was more profitable than just focusing on the Santa Claus rally.
What to expect
As we approach the end of 2024, everyone’s eyes will be on Bitcoin’s next move. Will it recover, or will it continue to struggle? There is still hope that Bitcoin will surprise us in the last days of December, especially with the expiration of options contracts and a shift in market sentiment.
Credit : coinpedia.org
