Now that it is almost Christmas, people hope for a Sinterklaas meeting Bitcoin and the rest of crypto is fading fast. But what exactly is the phenomenon and how many times has the Christmas miracle occurred in the past?
What is a Santa Gathering? Bitcoin Bulls most wanted gift
A Santa rally is defined as a “calendar effect” that occurs around the holidays. According to Investopedia, there is some disagreement about the exact timing of a Santa Claus gathering. One camp claims it’s the run-up to Christmas where shareholders get an early gift, while the other camp claims it’s the week after Christmas leading up to January 2.
The idea behind the rally is the same: investors are suddenly euphoric with the joy of the holidays, are considering a fiscal repositioning at the end of the year, and often have new Christmas bonuses to spend. Low volume and liquidity in the holiday market allows prices to move faster, like Dasher, Dancer, Prancer and Vixen through the snowy night sky.
Investopedia further concludes that the idea behind the Santa Claus rally is not very valid when analyzing S&P 500 returns during this period. But what about Bitcoin and crypto, where private investors dominate the market and trade 24/7 – even on Christmas Day?
The complete history of holiday seasons in crypto | BTCUSD on TradingView.com
The Scrooge Effect: Bears Say Bah Humbug To Possible Crypto Rally
The chart above shows the crypto version of the Sinterklaas rallytaking into account both the weeks before and after the annual holiday.
With just a few pennies, a breakout rally continued until Bitcoin hit $40 for the first time. In 2011, price action in December was more red than green.
The following Santa Claus rally continued to deliver gifts to crypto holders for almost an entire year, until December 2013 hit and one of the worst downward trends ever followed until December 2014. Bitcoin then reached its last bear market bottom of Christmas just days away.
The next two Christmases in 2015 and 2016 were merry and bright for Bitcoin bulls. But in December 2017, the euphoria around Christmas turned out to be the peak, resulting in another bear market.
In 2018, we highlighted December in blue as the most neutral price action for the holiday season. Although Bitcoin had fallen before, it had already bottomed out and another bull run began in the following months. It is difficult to call this price action bullish or bearish.
Just as the bull market experienced consecutive green seasons in 2015 and 2016, so did crypto investors in December 2019 and December 2020. In fact, December 2020 brought BTC a new all-time high — the first since December 2017. Time highs were made in 2021, but by December it was back on a relentless downtrend for crypto.
Here we are a year later and the chart above gives us some clues as to what might happen next. During the two biggest bear markets, Bitcoin suffered two December in a row from Scrooge-like behavior in the crypto industry. While we called December 2nd in the second bear market neutral, it was also far from bullish.
Given this pattern, December has a cyclical rhythm that could mean another chunk of coal for investors this year. However, just looking at the data, there’s about a 50/50 chance that this holiday season will be something to celebrate in crypto.
