Bitcoin Slips as Holidays Approach: Will the Crypto Market See a Santa Claus Rally?
Bitcoin has dropped 12% from its all-time high of $108,353, erasing gains from early December. As Christmas draws near, crypto traders are left questioning whether this year will bring the much-anticipated “Santa Claus” rally.
Historically, between 2014 and 2023, crypto markets rallied around the holidays 80% of the time, according to a CoinGecko report. However, Bitcoin’s recent decline and reduced institutional investment have cast doubts on the possibility of a holiday rally this year.
Will Crypto Markets See a Santa Rally in 2024?
The “Santa Claus” rally refers to a period of price gains during the last five trading days of the year and the first two trading days of the new year. This year, the key timeframe spans December 27, 2024, to January 2, 2025.
Bitcoin’s current decline has dampened expectations for a rally, but historical trends show that crypto markets have often gained post-Christmas. Of the last 10 years, markets corrected instead of rallying three times, including the steep 12.12% pre-Christmas pullback during the ICO bubble of 2017.
Currently trading at $97,000, Bitcoin is struggling to gain momentum. A post-Christmas revival in institutional interest could, however, provide the spark needed for a rally.
At the same time, the total market capitalization of cryptocurrencies—excluding Bitcoin—has started to recover, signaling that Altcoins might outperform in the first days of 2025.
Bitcoin’s Q4 2024 Price Performance
Bitcoin’s Q4 returns have been lackluster compared to previous bull runs. While Q4 in 2020, 2017, and 2013 saw gains of 480%, 215%, and 168% respectively, Bitcoin’s current quarterly gains stand below the median of 54.80%.
Institutional interest is waning, evident in the net outflows from Bitcoin Spot ETFs. This reduced capital inflow makes it less likely for Bitcoin to retest its all-time high before year-end.
The Trump Effect, South Korea, and Asia’s Role in This Cycle
Geopolitical factors and institutional adoption across Asia are influencing Bitcoin this cycle.
- Trump’s Pro-Crypto Appointments: President-elect Donald Trump has named several crypto advocates to key positions, including Stephen Miran as Chair of the Council of Economic Advisers and David Sacks as AI and crypto czar. Despite these developments, Bitcoin prices continue to slide.
- Asia’s Growing Influence: South Korea, the third-largest cryptocurrency market, accounts for over 9% of global trade volume. With its pro-crypto stance and tax delays until 2027, South Korea is paving the way for Bitcoin adoption in Asia.
- Institutional Moves: Asian firms are adding Bitcoin to their balance sheets. For instance, Japan’s Metaplanet now holds 1,142 BTC, signaling increasing institutional adoption in the region.
Key Levels to Watch Over the Holidays
Bitcoin traders are closely monitoring these critical levels as the holidays approach:
- Support at $89,376 and $92,500: A close below $89,376 could trigger a sell-off, potentially pushing BTC toward $81,500.
- Resistance at $100,000: A close above this level could reignite bullish momentum and set the stage for a new all-time high above $108,000.
Conclusion
As Bitcoin grapples with resistance and a lack of institutional inflows, the spotlight may shift to Altcoins this holiday season. Whether or not a Santa Claus rally materializes, traders should prepare for volatility and keep a close eye on key support and resistance level
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