Bitcoin’s Fabled Santa Rally Disappoints Again This Year
As the year 2024 draws to a close, the cryptocurrency world is eagerly awaiting the traditional "Santa rally" – a phenomenon where the largest cryptocurrencies tend to experience a significant price surge in the final weeks of the year. However, this year’s performance has been quite underwhelming for bitcoin (BTC), with it on course to slide 11% instead of the expected 2.8% gain.
The Historical Santa Rally
For those who may not be familiar, the concept of a Santa rally is based on historical data that shows a consistent price increase in the final weeks of the year. On average, bitcoin tends to add around 2.8% in the 51st week, with some years seeing even higher gains. However, this year’s performance has been drastically different.
A Brief History of Bitcoin’s Year-End Performance
To put things into perspective, let’s take a look at the historical data. In five out of the past six years, the BTC price has dropped in the final week of the year. While it’s worth noting that 2023 was an exception to this trend, with a slight gain, this year’s performance is looking increasingly bleak.
The Fourth Quarter: A Time for Growth
The fourth quarter tends to be one of bitcoin’s strongest periods, with the BTC price rising an average of 85% over the last three months of the year since 2013. However, in 2024, this trend has been severely disrupted, with the current drawdown less than 50%. This is a stark contrast to previous years and raises concerns about the overall health of the market.
A Comparison to the 2021 Drawdown
The current drawdown bears some similarities to the start of 2021. On January 8th, 2021, bitcoin was trading at around $40,000. However, by January 27th, the price had dropped to $30,000 – a significant 25% slide. While this is not as large as the current drawdown, which stands at around 15%, there are some concerning parallels.
Realized Price: A Key Indicator
The realized price of bitcoin continues to drive higher, reflecting the average on-chain cost for all tokens in circulation. This means that investors are, on average, buying coins at increasingly higher prices. While this may not seem like a bad thing, it’s essential to note that this trend can be indicative of a potential market correction.
Short-Term Holder’s Realized Price: A Bull Market Indicator
The short-term holder’s realized price (STH RP) is another crucial indicator that reflects the average on-chain acquisition price for coins moved within the last 155 days. Currently, this level stands at $84,000, suggesting that the bull market may still be intact as long as bitcoin stays above this key level.
Conclusion
The Santa rally has become a highly anticipated event in the cryptocurrency world, but this year’s performance has been disappointing. The drawdown in 2024 bears some similarities to the start of 2021, and the realized price continues to drive higher. However, the short-term holder’s realized price remains above $84,000, indicating that the bull market may still be intact. As we enter the final week of the year, investors will be watching closely to see if bitcoin can recover some of its lost ground.
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