What Happened to Bitcoin’s Santa Rally?

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What to know:

  • Historically, the fourth quarter has been the most bullish for bitcoin, with prices up by an average of 85% since 2013.
  • The last week of the year tends to see at least a 3% gain on average, but the past five out of six years have seen a decline.
  • The current short-term holder’s realized price (STH RP) is $84,000, suggesting the bull market is still intact as long as bitcoin stays above this key level.

As a seasoned researcher with years of experience in the cryptocurrency market, I have witnessed firsthand the unpredictable nature of Bitcoin (BTC). While I have grown accustomed to its historical tendencies, such as the year-end “Santa rally,” this year appears to be an exception. The underperformance of BTC in the fourth quarter, traditionally a bullish period, is intriguing and somewhat disconcerting.

By the end of 2024, Bitcoin (BTC) is showing weakened performance, which stands in contrast to its typical strong end-of-year growth, often referred to as the “Santa Claus rally.

In simple terms, the leading cryptocurrency usually increases by approximately 2.8% during its 51st week, but this year it’s projected to decline by 11%. Additionally, over the past six years, the price of Bitcoin has dropped rather than rising by 3% in the final week (week 52). Therefore, there seems to be little optimism for an increase this time.

As the month of December approaches and even extends a few days before or after, the specific timeframe for the so-called Santa Rally can be observed.

As a researcher studying Bitcoin trends, I’ve noticed something unusual this year: the usual surge in the fourth quarter hasn’t been as strong as it has been historically. According to data from Coinglass, since 2013, the average increase in Bitcoin price during the last three months of the year has been approximately 85%. However, in 2024, this figure is significantly lower, sitting at less than 50%. This underperformance in the fourth quarter is a departure from the norm.

As someone who has weathered numerous market fluctuations throughout my career as a financial analyst, I find a striking resemblance between the current drawdown and the beginning of 2021. While it may seem late for Santa to be making an appearance down the chimney, this bearish trend brings back memories of past challenges that markets have faced and overcome. However, I believe that with careful analysis, prudent investment strategies, and a dash of optimism, we can navigate through these turbulent times, just as we have done before.

On January 8, 2021, bitcoin was approximately $40,000 in value. However, by January 27, its price had decreased to around $30,000, which represents a significant drop of about 25%. This decrease is larger than the current 15% reduction we’re seeing.

Despite this dip occurring during a bullish trend that began around $10,000 in December 2020 and peaked at $70,000 in November 2021, the average price at which all tokens in circulation were bought (realized price) has been steadily increasing. This indicates that investors are generally purchasing coins at increasingly higher prices on average.

Currently, the price is higher than what short-term holders paid on average when they recently acquired their coins (within the last 155 days). This difference indicates the current price level.

Between December 2020 and April 2021, Bitcoin consistently remained higher than the average price that short-term holders paid (Average Price of Short-Term Holders – APSTH), using this value as a foundation for further growth; it’s common to see Bitcoin do this during bull markets. At present, the APSTH stands at $84,000, indicating that the bull market is likely ongoing so long as Bitcoin maintains its position above this crucial threshold.

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2024-12-20 17:56