As 2024 draws to a close, Bitcoin (BTC) is underperforming, contrary to its historic year-end “Santa Rally” performance.
The largest cryptocurrency typically gains about 2.8% in the 51st week, but is expected to drop 11% this week. It also tends to rise by 3% in week 52, but the BTC price has fallen in five of the past six years. Therefore, I don't have high expectations this time either.
The exact timing of what is considered a Santa rally varies, but it's clear that December is closer to January, perhaps a few days before or after.
This trend extends across quarters as well. Bitcoin tends to perform best in the fourth quarter, but its performance has been weak this year. Since 2013, BTC prices have risen an average of 85% in the last three months of the year, according to data from Coinglass. By 2024, it will fall below 50%.
This decrease in current certainly reminds us of the start of 2021, which is a little slower than Santa popping out of the chimney.
On January 8, 2021, Bitcoin was around $40,000. By January 27, the price had fallen to $30,000, a 25% drop and slightly larger than the current 15% drawdown.
However, this drawdown came in the midst of a bull market that started at around $10,000 in December 2020 and ended at $70,000 in November 2021. The similarity is that the realized price, which is the average on-chain cost of all tokens in circulation, continues to rise. This means that investors are buying the coin at a higher price on average.
Meanwhile, the price is above the realized price for short-term holders, reflecting the average on-chain acquisition price of coins moved within the past 155 days.
From December 2020 to April 2021, Bitcoin remained above the short-term holder realized price (STH RP) and used this level as support. Typically, in bull markets, Bitcoin uses this price level as support. The current STH RP is $84,000, suggesting that the bull market is still intact as long as Bitcoin remains above this important level.
