SuperEx丨【Christmas Rally】, a small carnival in the cryptocurrency market.
#SuperEx #cryptocurrency #Christmas
The Christmas rally originally referred to the period consisting of the last five trading days of December each year and the first two trading days of the following year. During this period, U.S. stocks usually experience a rally. As the cryptocurrency market has gradually expanded in scale, a “Christmas rally” has also begun to emerge in the cryptocurrency market. And such a term implies that Santa Claus drives his sleigh to boost the market and keep it rising.
Analysts at LPL Financial said that judging from the historical data of the past nearly 20 years, there is no seven-day combination with a higher yield than that during the Christmas period throughout the year. Even going back to the data as far as 1950, the average yield during these seven days around Christmas has reached 1.33%, which is the second-best seven-day combination in a year.
Although the history of the cryptocurrency market is relatively short, the data of the past five years shows that the Christmas rally has indeed become an investment window worth looking forward to.
The Performance of the Christmas Rally in the Cryptocurrency Market in the Past Five Years.
2019: Bitcoin’s Rebound from the Festival Trough
In December 2019, after Bitcoin had fallen to an annual low near $6,400 earlier, it rebounded strongly to $7,400 during the Christmas period. Although the overall increase was only 15%, it had a significant effect on boosting market sentiment and promoted the return of market funds. Meanwhile, mainstream cryptocurrencies such as ETH and LTC also saw increases of more than 10% during the Christmas period.
Cause Analysis:
· The market had been oversold earlier, and the technical aspect entered a rebound range.
· The optimistic sentiment brought by the holiday effect promoted the inflow of funds.
2020: The Initial Appearance of a Bull Market and the Accelerated Entry of Institutions
The Christmas rally in 2020 was quite classic. At that time, the price of Bitcoin broke through the $20,000 mark and continued to rise to above $28,000, with an increase of more than 40%. Meanwhile, ETH also rose from $600 to $730. The whole market sentiment was high, and the entry of institutional funds became the key driving force.
Cause Analysis:
· The loose policies of the Federal Reserve made institutions begin to regard Bitcoin as “digital gold”.
· The holiday effect and the entry of institutions resonated and accelerated the rise.
2021: A Strong Rebound Amid Turbulence
In 2021, although the cryptocurrency market was affected by inflationary pressure and policy uncertainties, Bitcoin fell from its annual high of $69,000 to below $50,000. However, it still achieved a performance of rebounding from $46,000 to $52,000 during the Christmas period. Similarly, other mainstream cryptocurrencies such as BNB and SOL also saw increases of more than 20% during the Christmas period.
Cause Analysis:
· The market sought technical rebound opportunities at the end of the year.
· Investors were optimistic about policy relaxation during the holiday period.
2022: Structural Opportunities in a Volatile Market
The Christmas rally in 2022 was rather lackluster. Bitcoin fluctuated slightly between $16,000 and $17,000. However, there were still structural opportunities in the market. Some low-market-capitalization cryptocurrencies achieved breakthroughs during this period. For example, MATIC and APE recorded increases of about 15% and 20% respectively.
Cause Analysis:
· The cryptocurrency market was generally in a bear market cycle, and the gains of mainstream assets were limited.
· Investors poured funds into projects with high growth potential.
2023: Santa Claus Arrived Again
The Christmas rally in 2023 was refreshing. Bitcoin rose rapidly from $28,000 to $34,000, while ETH broke through the psychological threshold of $2,000. Meme coins and AI concept coins performed particularly prominently. Among them, PEPE and FET saw increases of more than 50% during this period.
Cause Analysis:
· The combination of artificial intelligence and blockchain attracted market attention.
· The holiday effect combined with abundant market funds promoted a comprehensive rise.
The Driving Factors Behind the Christmas Rally in the Cryptocurrency Market
- Holiday Sentiment Drives the Inflow of Funds
During the Christmas period, market sentiment is often rather optimistic. Influenced by the holiday atmosphere, investors tend to make positive arrangements. In addition, due to the closure of the traditional financial market, the cryptocurrency market has become the main choice for capital flow.
- The Year-End Asset Allocation Effect
Institutional investors and large holders often adjust their asset allocations at the end of the year to settle annual profits and losses. Such behavior may lead to the flow of some funds to cryptocurrency assets with growth potential, thus forming a short-term capital inflow effect during the Christmas period.
- Market Technical Rebound Opportunities
The period around Christmas is often a key node in the market cycle. Many assets will experience technical rebounds after previous adjustments. Such rebounds are not only corrections to the oversold market but also provide short-term profit opportunities for investors.
- The Dissemination Effect of Social Media
Investors in the cryptocurrency market are generally sensitive to hot topics and public opinion. During the Christmas period, the attention on the “Christmas rally” on social media will further enhance market sentiment and attract more funds into the market.
Summary: The Christmas Rally, a Worthwhile Carnival to Look Forward To
The Christmas rally is undoubtedly a bright spot in the cryptocurrency market. Judging from the data of the past few years, the optimistic sentiment and capital inflow during the holiday period have made this phenomenon the focus of investors’ attention at the end of each year. Whether it is mainstream cryptocurrencies, Meme coins, or projects in emerging sectors, the Christmas rally can always inject vitality into the market and provide rare profit opportunities for investors.
The Christmas rally in 2024 is coming soon. Are you ready to seize this small carnival?
