Why Bitcoin's Santa Rally is a No-Show This Year: Insights and Analysis

What Happened to Bitcoin's Santa Rally?

Historically, the fourth quarter is Bitcoin's (BTC) strongest period; however, this year, it's showing signs of underperformance.

As we approach the end of 2024, Bitcoin is sliding instead of rising, contrary to its usual year-end Santa rally. Typically, Bitcoin adds about 2.8% in the 51st week, but this week it's on track for an 11% drop. Additionally, while it usually gains around 3% in week 52, it has dropped in five of the past six years, indicating a bleak outlook.

The fourth quarter has generally been one of Bitcoin’s strongest, with an average rise of 85% since 2013, but in 2024, it’s less than 50%. This decline is reminiscent of early 2021, though it’s occurring a bit later than expected for Santa to arrive.

For context, on January 8, 2021, Bitcoin was around $40,000, and by January 27, it had dropped to $30,000, marking a 25% slide. Currently, there’s a 15% drawdown, but it’s important to note that the earlier drop was amidst a bull run that escalated from $10,000 in December 2020 to a peak of $70,000 in November 2021.

Despite the current downturn, the realized price (the average on-chain cost for all tokens in circulation) continues to increase, suggesting that investors are buying coins at higher prices. The price also remains above the short-term holder's realized price (STH RP), which is currently at $84,000. This level historically serves as support during bull markets.

From December 2020 to April 2021, Bitcoin stayed above this STH RP and used it as a support level. As long as Bitcoin remains above $84,000, the potential for a bull market remains intact.

BTC: On Chain Cost Basis (Glassnode)