How Frequently Does It Happen?
From 2014 to 2023, the crypto market experienced the “Santa Claus rally” 8 times post-Christmas. Market capitalization grew by 0.69% to 11.87% between December 27 and January 2. This concept, popularized by Yale Hirsch, describes strong market performance during the year’s final trading days and the first two of the new year.
Interestingly, the rally occurred less often—5 times—before Christmas Day, with gains ranging from 0.15% to 11.56%.
Years of Notable Declines
Some years saw crypto declines instead of rallies. The sharpest pre-Christmas drop of 12.12% occurred in 2017, following the ICO boom. Post-Christmas pullbacks in 2021 and 2022 recorded decreases of 5.30% and 1.90%, respectively.
Consistent Double Rallies
Only three years saw rallies both before and after Christmas:
- 2016: Pre-Christmas gains of 11.56% and post-Christmas gains of 10.56%.
- 2018: Modest growth of 1.31% and 4.53%.
- 2023: Gains of 4.05% before Christmas and 3.64% after.
December’s Broader Trends
The entire month of December showed mixed results. In five years, the market grew significantly, with increases of 16.08% to 94.19%. However, in the other five years, pullbacks ranged from 1.73% to 15.56%.
Bitcoin and the Santa Claus Rally
Pre-Christmas Performance
Bitcoin showed pre-Christmas rallies 7 times in the past decade. Gains ranged from 0.20% to 13.19%, with the largest rally in 2016 as Bitcoin reached $1,000.
Post-Christmas Results
Post-Christmas rallies occurred 5 times, with increases between 0.33% and 10.86%. Bitcoin’s largest drop was in 2017, falling 21.30% pre-Christmas. Other notable declines included 1.37% in 2015 and 0.11% in 2019.
Average Returns from Santa Claus Rally
Speculating on Bitcoin during these periods yielded modest returns. On average:
- Pre-Christmas: 1.32% gain.
- Post-Christmas: 1.29% gain.
For December as a whole, average returns climbed to 9.48%, significantly outpacing short-term Santa Claus rally gains.
Is the Rally Reliable?
While exciting, the Santa Claus rally in crypto and Bitcoin remains inconsistent. Variations in market behavior underscore its unpredictability.
Methodology
This analysis studied daily percentage changes in total crypto market capitalization from December 1, 2014, to January 2, 2024. Two definitions of the Santa Claus rally were considered:
- Pre-Christmas (December 19–25).
- Post-Christmas (last five trading days and first two trading days of the year).
Data was sourced from CoinGecko. This article serves informational purposes only and is not financial advice. Conduct thorough research before investing.
