Author: Lim Yu Qian Translation: Vernacular Blockchain
From 2014 to 2023, the crypto market had eight "Santa Claus Rally" after Christmas in 10 years, with the total crypto market value rising by 0.69% to 11.87% in the week from December 27 to January 2 of the following year. This phenomenon draws on the definition of Yale Hirsch, who is considered to be the originator of the term "Santa Claus Rally", which originally refers to the market performance in the last five trading days of each year and the first two trading days of the following year.
On the other hand, the crypto market has fewer "Santa Claus Rally" in the week before Christmas, which has only occurred 5 times in the past 10 years. Similar to the rally after Christmas, these pre-Christmas gains ranged from 0.15% to 11.56%.
In the years without the "Santa Claus Market", the crypto market experienced the largest correction before Christmas in 2017, falling by 12.12%. This drop was the result of the price crash after the ICO boom that year. In addition, the crypto market correction before Christmas was relatively small, ranging from only 0.74% to 1.25%. At the same time, the market corrections after Christmas in 2021 and 2022 were 5.30% and 1.90% respectively.
It is worth noting that only 3 of the past 10 years have seen the "Santa Claus Market" in the crypto market both before and after Christmas. These three years are:
2016, when the total market value of the crypto market rose by 11.56% before Christmas and 10.56% after Christmas;
2018, although the market was in adjustment throughout the year, it recorded a moderate increase of 1.31% and 4.53% before and after Christmas respectively;
2023, in the context of a bear market recovery, the crypto market rose by 4.05% before Christmas and 3.64% after Christmas.
In contrast, the performance of the total market value of the crypto market throughout December was even more extreme. In the past 10 years, the overall market in December has increased by 16.08% to 94.19% in 5 years. In the case of the other 5-year correction, the market decline in December ranged from 1.73% to 15.56%.
Overall, the "Santa Claus rally" in the crypto market is not a stable phenomenon, and its performance varies significantly and is difficult to predict.
In the past 10 years, Bitcoin has experienced a "Santa Claus rally" 7 times in the week before Christmas and 5 times in the week after Christmas. Specifically, Bitcoin's gains before Christmas ranged from 0.20% to 13.19%, while its gains after Christmas ranged from 0.33% to 10.86%. This is consistent with the performance of the broader crypto market "Santa Claus rally".
Bitcoin's biggest "Santa Claus rally" occurred in the week before Christmas in 2016, when the price of Bitcoin rose by 13.19% and broke through the $1,000 mark.
Bitcoin's biggest drop occurred in 2017, not the "Santa Claus rally". At that time, the price of Bitcoin fell by 21.30% before Christmas. In addition, Bitcoin also experienced smaller drops before Christmas in 2015 and 2019, of 1.37% and 0.11% respectively. After Christmas, the price of Bitcoin fell between -0.04% and -6.42%.
In other words, if a speculator participated in Bitcoin's "Santa Claus Market" every year from 2014 to 2023, bought and sold in the week before Christmas, the average return would be 1.32%; while the same operation in the week after Christmas would have an average return of 1.29%. In contrast, if the speculator chose to participate in Bitcoin price fluctuations throughout December, the average return would be 9.48%, at least 7 times the return of the "Santa Claus Market".
However, similar to the "Santa Claus Market" in the crypto market, Bitcoin's "Santa Claus Market" effect also exhibits inconsistent characteristics.
The following is the "Santa Claus Effect" data based on the daily percentage change in the total market value of the crypto market:
Bitcoin's "Santa Claus Effect" data over the years, based on the daily percentage change in Bitcoin's price in each specific time period:
This study, based on CoinGecko data, examined the past decade (December 1, 2014). The study looked at the two most commonly used definitions of the "Santa Claus Effect" or "Santa Rally" from Investopedia:
Pre-Christmas: The week before Christmas, December 19-25.
Post-Christmas: The last five trading days of the year plus the first two trading days of the following year.
This study is for illustrative and informational purposes only and is not financial advice. Please do your own research and exercise caution before investing in any cryptocurrency or financial asset.
Hong Kong has ruled that Worldcoin violates privacy regulations and has ordered the cessation of iris and facial image collection from its citizens.
WeiliangSEA has emerged as a hub for transnational criminal networks, primarily originating from China. These organisations exploit millions of victims globally through sophisticated scams like pig butchering schemes.
KikyoWorldcoin faces global sanctions over privacy concerns, with bans in multiple countries including France, India, Hong Kong, and Brazil. Despite its ambition to offer universal financial access, questions remain about its approach and regulatory compliance.
JoyThe SEC has approved eight spot Ether ETFs, marking a significant development following speculation that ETH might be classified as a security. This approval comes just months after the SEC granted similar approval for spot Bitcoin ETFs.
CatherineMeta unveils Chameleon, its entry into the multimodal AI race, aiming to process text, images, and sound in one model. However, facing criticisms over misinformation and harmful ads, Meta's advertising prowess contrasts with its AI development.
WeatherlyA Texas judge rules that Ian Balina sold unregistered securities through Sparkster (SPRK) tokens, marking a partial victory for the SEC in its 2020 lawsuit.
AlexA Binance executive collapsed in a Nigerian court during arraignment on money laundering and tax evasion charges, leading to an adjournment for medical attention.
MiyukiLearn how the FIT 21 bill’s decentralization test defines digital commodities, crucial for protocols aiming to decentralize.
WeiliangFormer Binance CEO CZ has not yet begun serving his four-month prison term despite being sentenced since 30 April. In contrast, former FTX CEO SBF, has already served nine months in jail. This disparity raises the question: will CZ ever serve his sentence?
KikyoElon Musk envisions a future where AI renders most jobs optional, proposing "universal high income" to support a jobless society. However, concerns persist about the impact on human well-being and the ethical implications of widespread AI reliance.
Anais