Bitcoin’s Q4 Struggles: Defying Historical Patterns

As 2024 comes to a close, Bitcoin (BTC) is failing to live up to its usual year-end performance, straying from the typical “Santa rally” seen in previous years.

Bitcoin generally experiences a 2.8% increase during the 51st week, but this year, it’s on track for an 11% decline. Additionally, although it tends to gain around 3% during the 52nd week, Bitcoin has fallen in five of the past six years, leaving little hope for a rally this time. The “Santa rally,” which traditionally takes place as December shifts into January, is looking increasingly unlikely in 2024.

This underperformance also extends to the entire fourth quarter. Historically, the last three months have been a strong period for Bitcoin, with an average rise of 85% since 2013, according to Coinglass data. However, in 2024, Bitcoin’s growth has been less than half of that, showing a much weaker performance than usual.

The current drawdown mirrors a similar situation from early 2021, though it is occurring a bit later than the typical Santa rally period. On January 8, 2021, Bitcoin was priced at approximately $40,000. By January 27, the price had dropped to $30,000, representing a 25% decline—larger than the current 15% drop. However, that decline occurred in the middle of a bull run that began in December 2020 at $10,000 and reached $70,000 by November 2021.

One common factor is that the realized price—the average price at which Bitcoin has been acquired on-chain—has continued to rise. This suggests that, on average, investors are purchasing Bitcoin at higher prices, which reflects growing long-term confidence. Meanwhile, Bitcoin’s price is still ahead of the short-term holder’s realized price (STH RP), which tracks the average acquisition price for coins moved in the past 155 days.

Between December 2020 and April 2021, Bitcoin maintained a level above the STH RP, often using it as support in the bull market. This pattern is typical in bull runs. Currently, the STH RP stands at $84,000, suggesting that as long as Bitcoin remains above this level, the bull market could still be intact.