Bitcoin experienced its toughest fourth quarter since 2022, but a time-honored Wall Street pattern may soon bring relief to battered BTC bulls.
That pattern is the S&P 500’s tendency to produce a Santa Claus rally — a rally during the last five trading days of December and the first two of January. A repeat of this pattern could improve sentiment in the bitcoin market.
Bullish Santa seasonally
Since 2005, the S&P 500 has gained 15 times during the Santa rally period and lost only five times, with an average return of 0.58%, according to data source The Market Stats. Going back to the 1950s, it has risen 77% of the time and never fallen three years in a row during that window. The index dipped in the last two Christmas periods.
Taken together, these data sets mean the S&P 500 is likely to rally into the new year.
For BTC, this bullish S&P 500 season is increasingly meaningful as rising institutional adoption via ETFs has tightened the link between digital assets and stocks. So a celebratory bid for stocks could spill over into bitcoin and the broader crypto market.
BTC’s Santa rally history has been motley since launch, with strong returns of 33% and 46% in 2011 and 2016 respectively. Other years have been weaker with declines of 14% in 2014 and 10% in 2021. Still, it averages 7.9% since 2011 when the market is quite small and dominated by OGs in the early years.
Gold, the star artist
According to TheMarketStats, gold has been the best performer, delivering a cumulative return of 95% during this period. Looking back to 2005, only 2023 had a slightly negative return.
This strength has coincided with gold pushing to new record highs above $4,400 per ounce. ounce at press time, suggesting another positive Santa period.
Broadly speaking, while gold is trading at all-time highs, the S&P 500 is only 1.5% away from its own record highs. Meanwhile, bitcoin remains about 30% below its peak.
