Finance

Is Bitcoin's Legendary Santa Rally DOA? Here’s What You Need to Know!

2024-12-20

Author: Nur

Bitcoin's Current Position Heading Into 2024

As we approach the end of 2024, Bitcoin (BTC) finds itself in a disappointing position, failing to ignite its customary year-end "Santa rally." Traditionally, this festive period sees Bitcoin gaining an average of 2.8% during the 51st week, but this year, the outlook is starkly different, with predictions leaning toward an 11% decline. In week 52, Bitcoin has typically enjoyed a 3% increase; however, it has experienced drops in five of the past six years, casting a dark shadow on any prospects for recovery this time.

Unusual Trend in Late December

The essence of the Santa rally typically unfolds in late December, as the calendar year winds down, instilling hope among traders and investors. Yet this year's fourth quarter has not aligned with past trends, typically one of Bitcoin's most robust periods. Historically, the cryptocurrency has surged with an average increase of 85% over the last three months of the year since 2013. This year, however, it has failed to hit even half that mark, drastically underperforming expectations.

Comparison to Previous Downturns

Looking back to the turbulent journey of early 2021, Bitcoin's recent downturn may draw chilling parallels. On January 8, 2021, Bitcoin was perched around the $40,000 mark, only to plummet to $30,000 by January 27—a staggering 25% drop. While the current drawdown has been 15%, the situations echo because the price responses were recorded during differing market sentiments.

Bullish Environment and Realized Prices

The bullish environment back in late 2020 initiated a dramatic bull run that escalated Bitcoin from about $10,000 to its all-time high of $70,000 by November 2021. Interestingly, the realized price, representing the average on-chain cost of all circulating Bitcoin, continues to trend upward, indicating that investors are still purchasing at escalating levels.

Short-term Holder's Realized Price

As it stands, the current short-term holder's realized price (STH RP) is set at $84,000, signaling that should Bitcoin maintain itself above this critical threshold, the potential for the bull market to continue remains optimistic. Historically, in bullish phases, Bitcoin tends to use this STH RP level for support, reflecting investor confidence even amidst market fluctuations.

Looking Ahead: Consumer Sentiment and Trends

Could consumer sentiment shift alongside fear and uncertainty as the new year approaches? Will Bitcoin finally catch the tailwind of its long-awaited Santa rally, or are we looking at a trend that’s here to stay? Keep your eyes peeled on this ever-volatile cryptocurrency market as we transition into 2024!