Bitcoin’s recent journey has marked one of its toughest fourth quarters since 2022, with the cryptocurrency currently holding at approximately $89,865.01. However, a historical pattern from Wall Street could provide a glimmer of hope for beleaguered Bitcoin bulls. This pattern, known as the “Santa Rally,” refers to the S&P 500’s typical uptrend during the final five trading days of December and the first two of January. A recurrence of this phenomenon might boost sentiment in the cryptocurrency market.
Data from The Market Stats reveals that the S&P 500 has recorded gains during the Santa Claus rally period 15 times since 2005, suffering losses only five times, with an average return of about 0.58%. Analyzing further back to the 1950s shows a remarkable trend: the index has risen 77% of the time in this timeframe, never experiencing three consecutive years of decline during this seasonal spell. Despite the S&P dipping in the last couple of Santa periods, the prevailing data suggests a high likelihood of a rally as the year draws to a close.
This potential uptick is increasingly relevant for Bitcoin, especially in light of the growing institutional adoption through exchange-traded funds (ETFs), which has tightened the connections between digital assets and traditional equities. Thus, a surge in stock prices could create a ripple effect, positively impacting Bitcoin and the broader cryptocurrency landscape.
Looking back, Bitcoin has had a mixed history during the Santa Claus rally season. The cryptocurrency posted notable returns of 33% in 2011 and 46% in 2016, while it also faced downturns of 14% in 2014 and 10% in 2021. Nevertheless, Bitcoin’s average return during the Santa period since 2011 stands at around 7.9%, particularly considering that the market was initially small, dominated by early adopters.
Amid these fluctuations, gold has emerged as a significant performer, boasting a remarkable cumulative return of 95% since 2005, with only 2023 marking a slight negative performance. Gold’s impressive trajectory is underscored by its recent push to new all-time highs, surpassing $4,400 per ounce, indicating the possibility of another favorable Santa period. While gold has been thriving, the S&P 500 is a mere 1.5% away from its record levels, in stark contrast to Bitcoin, which remains approximately 30% below its peak.
As the festive season approaches, market watchers are keeping a close eye on the potential for a Santa Rally to not only bolster traditional equities but also provide much-needed relief to the beleaguered Bitcoin market.
