Key Points
- Bitcoin’s recent 12% decline has dampened hopes for a “Santa Claus” rally this year.
- A CoinGecko report indicates that crypto markets have historically rallied during the Christmas season 80% of the time from 2014 to 2023.
Bitcoin’s value has dropped 12% from its all-time high of $108,353, wiping out gains made during the second week of December. As Christmas approaches, cryptocurrency traders are speculating on the likelihood of a “Santa Claus” rally this year.
Hopes for a Santa Rally Dwindle
A CoinGecko report reveals that in eight out of ten instances between 2014 and 2023, cryptocurrency markets experienced a surge around the Christmas holidays. However, Bitcoin’s recent price drop has squashed expectations of a Santa rally this year. Furthermore, a decrease in institutional investment inflow has further dampened sentiments.
The term “Santa Claus” rally refers to price increases in cryptocurrency during the last five trading days of the year and the first two trading days of the next year. The performance of the crypto market is therefore crucial during the one-week period from December 27, 2024, to January 2, 2025.
Bitcoin’s fall from its all-time high has raised concerns among BTC traders, and the likelihood of a Santa Claus rally this cycle seems bleak. Historically, between 2014 and 2023, crypto markets have rallied post-Christmas. However, the markets experienced a pullback instead of a rally three times out of ten in the past decade, with a correction as steep as 12.12% pre-Christmas, during the ICO bubble of 2017.
Altcoin Market Shows Signs of Recovery
With BTC hovering around $97,000 on Tuesday, December 24, a pre-Christmas rally seems unlikely. However, BTC could see gains post-Christmas if institutional interest in the largest cryptocurrency revives.
The total market capitalization of cryptocurrencies, excluding Bitcoin, has begun its recovery this week. The daily chart shows bullish signs that support the possibility of gains in the market cap of altcoins. This suggests that altcoins could potentially rally post-Christmas or within the first two trading days of 2025.
Key Levels to Monitor During the Holidays
Bitcoin derivatives traders across exchanges such as Binance, OKX, and Deribit are bullish on BTC gains. The long/short ratio exceeds 1 across these exchange platforms, and BTC has seen a spike in open interest, indicating increased relevance and demand among traders.
Over the past 24 hours, more than $38 million in Bitcoin short positions have been liquidated, reflecting prevailing bullish sentiment.
Key levels to watch during the holidays include support at $89,376 and $92,500. A daily candlestick close below the $89,376 level could trigger a breakdown of key supports and suggest that sellers are ready to pull BTC to the lower boundary of the imbalance zone on the weekly price chart at $81,500. This could lead to cascading liquidations and a steep sell-off in crypto.
Resistance is expected at the $100,000 milestone. A daily candlestick close above this level brings the new all-time high above $108,000 back into play as the target. BTC could extend its gains and retest its all-time high, determining the cycle top.
Despite the current sentiment among traders, Bitcoin remains highly volatile, and these key levels provide guidance as traders navigate holiday-induced volatility in the crypto market.