Digital Assets
Can We Expect a Santa Claus Rally As 2024 Comes to a Close?
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Just as people started to lose hope, the Santa Claus rally knocked on the door, and prices are now experiencing a nice green lift. And no, the rally isn’t late. It was actually to occur during the last trading week of the year, as it has.
Interestingly, Bitcoin hit its all-time high of $108,135 just a week ago. However, the subsequent 15% drop in value over the next few days to almost $92,000 triggered a panic in the market.
This is despite the fact that the severity of Bitcoin drawdowns during bull market uptrends has declined, which, as per Glassnode, reflects spot ETF demand and rising institutional interest.
While the crash wasn’t out of the ordinary for crypto markets, especially after a 61.2% uptrend in BTC price since November 5 — which concluded US presidential elections with President-elect Donald Trump winning the race — it was enough to spook market participants.
The correction wasn’t limited to crypto but was also seen in the stock market after US Federal Reserve Chair Jerome Powell shared his cautious outlook on future rate cuts, with key interest rates currently between 4.25% and 4.5%.
This led institutions to sell their Bitcoin exposure, with BTC Spot exchange-traded funds (ETFs) recording just over $1.5 billion in total net outflows over four consecutive days, as per the data from Farside.
The cumulative total net inflow of ETFs, however, is still strong at $35.49 billion, and total net assets are hitting the milestone of $110 billion, according to SoSo Value. BlackRock‘s (BLK -1.09%) IBIT, which is $53.78 billion in net assets, accounts for almost half of the total assets.
Not just institutions but retail panic sold too, especially the new entrants.
“These new traders have not seen mid-sized corrections before and are expressing panic over foreign market conditions to them. Historically, when retail traders begin to sell based on panic and emotion, whales and sharks have opportunities to scoop up more coins with little resistance, creating bounces.”
– Noted crypto data provider Santiment
Microstrategy (MSTR -4.22%) took advantage of the opportunity and bought even more Bitcoin, securing 3,177 BTC last week for $299 million. With this, the largest public holder of Bitcoin now has 444,262 BTC. This has resulted in MSTR stock’s value trading at $359, up nearly 400% YTD but down 33.6% from its November 21 peak of about $541.
