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Traders often predict that these two catalysts will drive crypto prices up or down in December – a ‘Santa Claus rally’ and tax loss harvesting.
These two terms are older than crypto, usually discussed by stock traders at the end of each financial year. How accurate are they for making stock or crypto price predictions?
Pentoshi on crypto price narratives
One of the most popular crypto Twitter accounts, @pentosh1 posted to his 657,000 followers to expect those two ‘stories’ in December.
He added the Wall Street bonus, as did several answers, and the Chinese New Year as a 2023 narrative for crypto prices. Many holders around the 2018 bear market will remember these thoughts.
Although he hasn’t expanded on that tweet thread yet this November, Pantoshi has been critical of this type of fundamental analysis over the years, saying ‘just trade the charts’ and ‘what matters’.
Santa Claus Rally
For example Last Christmas, Pentoshi Tweeted Image below and their comments:
Data on Santa Claus Rally:
Fact: This is pure dealing with bad traders + underwater bag holders
Where is the magical institutional bid and volume coming this week? After taking the risk for EOY, but will have the risk going forward? It’s you versus the charts. Narrative = Scam.
Investopedia Explains rationale for a Santa Claus rally’A general sense of optimism and seasonal cheer on Wall Street, and investing holiday bonuses,
This theory comes from Yale Hirsch’s Stock Trader’s Almanac. written in 1972,
tax loss harvesting
Tax loss harvesting is defined as selling off assets.Limit the amount of taxes payable on short-term capital gains, which are generally taxed at a higher rate than long-term capital gains,
Last December Pentoshi pointed out that one narrative was that institutions would sell until the last trading day of the month, then the crypto market would pick up.
Although bitcoin price action closer to 2021 was bearish, the overall macro downtrend was the deciding factor.
Pentoshi in July 2022 made interesting predictions That more funds will ‘fly away’ – the focus of these types of crypto price narratives.
Russian oligarchs, tax harvesting, etc. Most of these narratives come from the same VCs, people at Tradefy, and funds that have blown up or will blow up in a few months.
Earlier this month it emerged that Sam Bankman-Fried’s Alameda Research is bankrupt and is set to lose $3.7 billion during the 2021 bull cycle.
The FTX Exchange Linked Fund was first conceived by a number of expert traders and quants.
bitcoin price predictions
Entering December, bitcoin is trading sideways, stuck in a 2% range at the time of writing around $16,500.
Since hitting an all-time high of $69,000 on Binance against USDT in November 2021, bitcoin has traded as low as $15,476 in a year – a 78% correction.
To the downside, some analysts predict that the $12-$14k level could be tested as support.
The 2019 high was $13,970 – plotted on the bitcoin price chart above, just above the 2018 yearly high of $13,715.
Pentoshi is unsure whether bitcoin will see a capitulation event and fall further down.
he is predicting Cut more sideways and accumulate for an extended period of time, so neither a Santa Claus rally nor tax loss sales.
To the upside, some traders predict a bear market rally could propel bitcoin to 2021 lows for a bearish retribution. The monthly wick for June 2021 reached $28,805.
Best crypto to buy right now for the next bull run
While most of his tweets offer technical analysis on short term price action, one of Pentoshi’s predictions in the longer term is that NFTs and gaming crypto tokens are a good investment. Today he tweeted:
NFTs onboarded more people to crypto than anything else and combining NFTs with gaming will add a lot to the next bull run imo. If I could pick one sector to be bullish on, this would be it. Passionate people and a serviceable industry and community with great reach.
He hasn’t named any specific altcoins or NFT collections yet.
Here crypto news we are following upcoming Calvaria: Duels of Eternity Game Which has now passed the $2 million mark in its pre-sale tokens.
We’ve also reported on Robotera Which is attracting interest from early investors at the presale stage.
Both are NFT-based games to earn crypto games tipped to be a hit with gamers in 2023. View their whitepaper here:
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