Bitcoin plunged to a December low of $92,442 on Dec. 23, quashing optimism for a "Santa Claus rally." The sharp correction comes after a 14.5% fall from its all-time high, leaving traders wary of festive season volatility.
Santa Claus Rally Expectations Shattered by Bitcoin’s December Price Drop
The "Santa Claus rally," which has traditionally led to substantial gains over the Christmas period in years that precede market cycle peaks, was dashed as Bitcoin fell to its lowest price since late November, casting doubt on such expectations, Cointelegraph reports.
Late on December 23, Bitcoin hit a four-week low of $92,442 in trading, a 14.5 percent drop from its all-time high of little more than $108,000 on December 17.
It fell below $94,000 in early trade on December 24 after temporarily reclaiming $95,000; it has now fallen more than 11% in the previous week.
Historical Performance of Bitcoin During Festive Seasons
Historically, bull markets in crypto have done well over the holiday season, but Bitcoin's terrible December performance has dashed expectations of a so-called Santa Claus rally, in which prices leap from the last five trading days of December into the first two trading days of January.
Bitcoin trader Mister Crypto looked at historical data and found that the years 2016 and 2020, just before market cycle peaks, had significant rallies between Christmas and New Year.
Eight out of ten times between 2014 and 2023, crypto markets saw a Santa Claus bounce after Christmas, according to a study released on December 13 by CoinGecko. In the one week between December 27 and January 2, total crypto market capitalization jumped between 0.7% and 11.8%.
Cycle Patterns Indicate Future Market Peaks
After reaching its 2021 cycle peak, Bitcoin (BTC) fell roughly 26% from its high of $69,000 on Christmas Day and kept falling throughout 2022, so there was no Santa Claus rally.
Following the four-year pattern that has played out since Bitcoin's birth, 2025 is predicted to be the peak year of this cycle, whereas 2021 was the peak year of the previous cycle.
Concurrently, crypto ETPs lose $17 billion due to December market drop.
When the options contracts for Bitcoin and Ether, worth about $18 billion, expire on December 27, the cryptocurrency markets may be in for some wild riding.
Dec. 22 was the lowest point in Bitcoin social mood this year, which may be a precursor to a comeback.
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