Financial markets often experience significant growth during the year-end period, particularly for stocks and cryptocurrencies. This phenomenon, known as the “Santa Claus Rally,” refers to a consistent rise in stock market indices around Christmas (December 25).
For Bitcoin and the cryptocurrency market, the benefits extend beyond this seasonal upward trend. Macro factors are also playing a crucial role in creating a favorable environment. Indicators of Bitcoin supply on the blockchain and exchanges are showing positive signals. Furthermore, pro-crypto policies under former President Trump are seen as a significant catalyst driving the strong price rally.
Related: Signals Indicate Bitcoin Could Reach $178K by 2025
Here, we analyze five key reasons why investors remain optimistic that Bitcoin will continue its upward momentum through December and into the new year.
Five Reasons Supporting Bitcoin’s Price Rally
1. Fed Expected to Lower Interest Rates in December
Historically, Bitcoin has thrived in a low-interest-rate environment. Since 2008, when the Federal Reserve maintained near-zero interest rates following the financial crisis, Bitcoin grew from nothing to $20,000 by Christmas 2017. Conversely, the rate hikes in 2018 led to a “crypto winter.” Similarly, rate cuts during the COVID-19 pandemic in 2020 propelled Bitcoin to new all-time highs.
Currently, with Federal Reserve Governor Christopher Waller signaling plans to lower rates at the December 17-18 meeting, Bitcoin has already surpassed $100,000 and shows no signs of slowing down.
2. Favorable Bitcoin Supply Cycle
Bitcoin’s unique design includes a mechanism where new supply decreases by 50% every four years. Unlike the U.S. dollar, which often loses value when the Fed lowers rates to stimulate spending and economic growth, Bitcoin strengthens purchasing power for long-term holders through strict supply control.
3. Increased Bitcoin Withdrawals from Exchanges
Data from CoinGlass reveals a sharp increase in Bitcoin withdrawals from exchanges, rising from 58,440 BTC on December 3 to 116,259 BTC by December 7. This trend, combined with the declining issuance of new Bitcoin, suggests that investors are prioritizing long-term holding—a bullish signal for Bitcoin’s price.
4. Positive Year-End Effect
Nasdaq analysis shows that Q4 is historically Bitcoin’s strongest quarter, with November and December being particularly active months. Following record-breaking growth in November, Bitcoin is likely to maintain its positive momentum during the Christmas season, provided market sentiment remains strong.
5. Pro-Crypto Policies from the Republican Party
Donald Trump has not only supported Bitcoin during his first term but is also promoting blockchain-friendly policies in his second term. CNBC reported on December 6 about a series of crypto-friendly appointments in the Trump administration, which has played a pivotal role in pushing Bitcoin past the $100,000 milestone.
With these macroeconomic and market-specific factors in place, Bitcoin appears poised to sustain its impressive performance into 2024. Whether the “Santa Claus Rally” or structural advantages, the cryptocurrency’s current momentum suggests continued optimism among investors.
