Where Is Bitcoin’s Traditional Santa Rally?

Bitcoin’s Q4 Struggles: A Break from Historical Trends

As 2024 nears its end, Bitcoin (BTC) is failing to meet its typical year-end expectations, bucking the usual trend of a strong “Santa rally.”

Bitcoin usually experiences an average gain of about 2.8% during the 51st week of the year. However, this time, it is on track for an 11% decline. Additionally, Bitcoin typically sees a 3% increase during the 52nd week, but over the past six years, it has fallen in five of them, offering little hope for a rally this year. The “Santa rally,” which generally occurs as December turns into January, is unlikely to materialize in 2024.

This underperformance extends to the entire fourth quarter. Traditionally, Q4 has been one of Bitcoin’s best-performing periods, with an average increase of 85% since 2013, according to Coinglass data. But in 2024, Bitcoin has gained less than half of that, showing a much weaker performance.

This current decline is reminiscent of the start of 2021, though it’s happening later than the usual timing for a Santa rally. On January 8, 2021, Bitcoin was priced around $40,000. By January 27, it had dropped to $30,000, representing a 25% decline—larger than the current 15% slide. However, that drop occurred during the middle of a bull run that began in December 2020 at $10,000 and peaked at $70,000 in November 2021.

One key similarity between the two periods is the rising realized price—the average on-chain price for all Bitcoin in circulation. This suggests that, on average, investors are buying at higher prices, indicating long-term confidence in Bitcoin. At the same time, the price of Bitcoin remains above the short-term holder’s realized price (STH RP), which tracks the average acquisition cost of coins that have been moved in the past 155 days.

From December 2020 to April 2021, Bitcoin consistently stayed above the STH RP, using this level as support, a pattern typically seen in bull markets. Currently, the STH RP stands at $84,000, suggesting that the bull market remains intact as long as Bitcoin stays above this critical threshold.