bitcoin has experienced its toughest fourth quarter since 2022, but a traditional Wall Street pattern could soon bring relief to battered BTC bulls.
That pattern is the S&P 500’s tendency to signal 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 Seasonality
Since 2005, the S&P 500 has gained during the Santa Claus rally period 15 times and lost only five times, with an average return of 0.58%, according to data source The Market Stats. If we go back to the 1950s, it has increased 77% of the time and has never decreased three years in a row during this period. The index fell in Santa’s last two periods.
Together, these data sets mean the S&P 500 is likely to post a rebound in the new year.
For BTC, this S&P 500 bullish seasonality is increasingly important as growing institutional adoption through ETFs has tightened the link between digital assets and stocks. Therefore, a festive sale in stocks could spread to bitcoin and the broader crypto market.
The history of BTC’s Santa Claus rally is checkered since its launch, with strong returns of 33% and 46% in 2011 and 2016, respectively. Other years have been weaker, with drops of 14% in 2014 and 10% in 2021. Still, it has averaged 7.9% since 2011, with the market being quite small and dominated by OGs in the first years.
The gold, the star
According to TheMarketStats, gold has been the best performer, generating a cumulative return of 95% over this period. If we look back to 2005, only 2023 recorded a slight negative performance.
This strength has coincided with gold hitting new all-time highs above $4,400 an ounce at press time, suggesting another positive Santa Claus period.
Overall, while gold is trading at all-time highs, the S&P 500 is just 1.5% away from its own record levels. Meanwhile, bitcoin remains roughly 30% below its peak.
