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The Fed’s updated forecasts have diminished expectations for additional easing extending into 2025, slightly dampening optimistic outlooks for the Bitcoin price and other risk assets.
The historical ‘Santa rally’ effect has typically provided notable support during the holiday season, but with a 14.5% decline in Bitcoin’s price from its December peak, optimism has waned.
This is evident as trading volume remains at a low of $55 billion, indicating that traders are less inclined to invest in the asset.
Is It Too Late for a Santa Rally?
Although this poor price performance is concerning, the ‘Santa Claus Rally’ period continues after Christmas, covering the last five trading days of December and the first two trading days of January.
From 2014 to 2023, the cryptocurrency markets witnessed a Santa Claus rally in eight out of ten instances post-Christmas, based on data from CoinGecko.
During these rallies, the overall crypto market capitalization increased between 0.69% and 11.87% over a one-week period from December 27th to January 2nd.
‘Santa Clause rallies’ over past years. Source: CoinGecko.
An exception occurred during the cycle peak in 2021, when the Bitcoin price had dropped approximately 26% from its high of $69,000 by Christmas Day and continued to fall throughout 2022.
The distinction is that 2021 marked the peak year of the cycle, while 2025 is anticipated to be the peak year of this cycle, following the four-year trend established since Bitcoin’s inception.
December 27th appears to be a plausible starting point for a Santa Claus rally, especially as the market is poised for increased volatility with $18 billion worth of Bitcoin and Ether options contracts set to expire.
Bitcoin Price Analysis: Is a Bottom In Sight?
Technical indicators suggest a possible bottom, with the breakdown of an ascending channel that has been forming since mid-November.
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BTC / USDT 1D chart, ascending channel pattern breakdown. Source: Binance.
This breakdown targets a potential bottom at the $87,728.44 support level, indicating a further 6.85% decline from current prices.
While the 50SMA currently provides support, it seems unlikely to serve as an early exit point. The Relative Strength Index (RSI) at 43 and the MACD line remaining below the signal line suggest that bearish sentiment continues to dominate Bitcoin’s price movements.
Consequently, the support at $92,597.58 may be compromised, leading to a retracement to lower support levels. However, this could ultimately afford Bitcoin a more stable foundation, setting the stage for a potential Santa Rally as the year concludes.
This New Opportunity Could Be the Better 2025 Play
While Bitcoin undoubtedly holds significant potential heading into 2025, its remarkable ascent this year has been overshadowed by meme coins – the primary narrative driving gains this cycle.
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The post Holiday Cheer Snubbed as Bitcoin Price Plummets 15% – Is the ‘Santa Rally’ Dead? appeared first on Cryptonews.
