Bitcoin experienced its toughest fourth quarter since 2022, but a secular trend on Wall Street could soon bring relief to battered BTC bulls.
This trend is the tendency of the S&P 500 to record a Santa Claus rally – a rise during the last five trading days of December and the first two days of January. A repeat of this trend could improve sentiment in the bitcoin market.
Bullish seasonality of Santa
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. Since the 1950s, it has increased 77% of the time and has never decreased three years in a row during that window. The index fell during the last two Santa periods.
Taken together, these data sets mean that the S&P 500 is likely to see a rally in the new year.
For BTC, this S&P 500 bullish seasonality is increasingly important as growing institutional adoption via ETFs has tightened the connection between digital assets and stocks. So, a festive stock bid could ripple through bitcoin and the broader crypto market.
The history of BTC’s Santa Rally has been checkered since its launch, with a strong return of 33% and 46% in 2011 and 2016, respectively. Other years have been weaker, with declines of 14% in 2014 and 10% in 2021. Yet it has averaged 7.9% since 2011, with the market being quite small and dominated by OGs in the early years.
Gold, the star
According to TheMarketStats, gold has been the best performer, delivering a cumulative return of 95% over this period. If we look at the year 2005, only the year 2023 recorded a slight negative return.
This strength coincided with gold hitting new all-time highs above $4,400 an ounce at press time, hinting at another positive Santa season.
Generally 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 around 30% below its peak.
