It’s that time of the year again when everyone is in a festive mood. One of the anticipated events this week is the so-called “Santa Claus Rally.” So, will we see major gains in Bitcoin (BTC) and/or Ethereum (ETH) this season?
Santa Claus Rally in a Nutshell
Previously, we discussed what the Santa Claus Rally is all about. In a nutshell, it’s a phenomenon in stock investments happening within “the final five trading days of the year and the first two trading days of the following year.” Since 1950 to 2023, the market has shown gains at an 80% probability.
Now, there’s an ongoing narrative that cryptocurrencies may exhibit surges these holidays. With that, let’s take a look at the background and possibilities of a Christmas rally in Bitcoin and Ethereum on our way to 2024.
Bitcoin’s Santa Claus Rally
Bitcoin does not appear to play ball during the Santa Claus Rally. Since cryptocurrencies trade 24/7 compared to stocks which are only limited by the operating schedules of the stock market, Techopedia compiled the performance of BTC starting from December 25th to January 2nd.
Based on the illustration above, BTC only indicated significant gains on a scale of four out of ten or 40% of the time. The most increase it got during these periods was in the days leading to 2021 when it soared 35.9%. The worst was in the run to the following year when it shed 6.9% of its value.
Ethereum’s Santa Claus Rally
Using the same formula, the source examined how Ethereum moved throughout the event from its launch in the Christmas of 2015 to the New Year of 2023.
From the looks of it, ETH has outclassed BTC in most instances. In an eight-year frame, the crypto pumped five times, translating to a 62.5% chance of benefitting from the Christmas rally. Even if we narrow Bitcoin’s stats from 2015 to the last occurrence, it’s still three out of eight times on the charts or a mere 37.5%.
The best return for ETH during the rallies was 29.6% in 2017 while its worst was a dip of 5.4% in 2021. It should be noted, however, that Ethereum appeared to track the movements of Bitcoin from 2019 onwards.
Will BTC and ETH Pump?
As displayed by the charts, Ethereum has better chances of outpacing Bitcoin during the Santa Claus Rally. But then again, if the two key narratives of BTC are placed in the equation being the anticipated mass approval of its spot exchange traded funds (ETFs) and halving all happening in the coming year, the premier crypto in terms of market cap could blow the roof.
If not during the Xmas season, the massive gains of Bitcoin might happen on the way to January 10 when the US Securities and Exchange Commission is expected to give all the applications a go. Meanwhile, Ether will most likely follow its crypto comrade in the coming bull run.