What is the Christmas market? How does it affect the encryption market? Data: The historical rise is around 10%.

From 2014 to 2023, the encryption market has experienced 8 pumps within 10 years during the 'Santa Claus rally' after Christmas. The total market value of the encryption market rose between 0.69% and 11.87% in the week from December 27th to January 2nd of the following year. This phenomenon is based on the definition of Yale Hirsch, who is considered the originator of the term 'Santa Claus rally', originally referring to the market performance during the last five trading days of each year and the first two trading days of the following year.

On the other hand, the encryption market has seen fewer occurrences of 'Santa Claus rally' in the week before Christmas, with only 5 occurrences in the past 10 years. Similar to the post-Christmas market, the magnitude of these pre-Christmas rises ranged from 0.15% to 11.56%.

Source: CoinGecko

1. How is the 'pump' market performing in the encryption market?

In years without the 'Santa Claus rally', the encryption market before Christmas in 2017 experienced the largest pump, dropping by 12.12%. This decline was the result of a sharp drop in prices after the ICO craze that year. In addition, the pre-Christmas encryption market only experienced a small pullback, ranging from 0.74% to 1.25%. Meanwhile, the market pullback after Christmas in 2021 and 2022 was 5.30% and 1.90% respectively.

It is worth noting that in only 3 of the past 10 years have the "Santa Claus market" of the encryption market appeared around Christmas at the same time. The 3 years are:

In 2016, the total market value of encryption rose by 11.56% before Christmas and by 10.56% after Christmas;

In 2018, although the market is in correction throughout the year, a moderate rise of 1.31% and 4.53% was recorded around Christmas, respectively;

In 2023, in the bear market recovery environment, the encryption market rose 4.05% before Christmas and 3.64% after Christmas.

In contrast, the overall market value of the encryption market was more extreme throughout December. Over the past 10 years, the overall market in December has grown by 16.08% to 94.19% for 5 years, and in the other 5 years, the market decline in December ranged from 1.73% to 15.56%.

Overall, the 'Santa Claus rally' in the encryption market is not a stable phenomenon, with significant performance differences and difficult to predict.

2. Will Bitcoin pump during Christmas?

In the past 10 years, Bitcoin has experienced the 'Santa Claus rally' 7 times in the week before Christmas and 5 times in the week after Christmas. Specifically, Bitcoin's rise before Christmas ranged from 0.20% to 13.19%, while the rise after Christmas ranged from 0.33% to 10.86%. This is consistent with the broader 'Santa Claus rally' in the encryption market.

The largest Christmas rally for Bitcoin occurred in the week before Christmas in 2016. At that time, the price of Bitcoin rose 13.19% and broke through the $1,000 barrier.

Image source: CoinGecko

The largest drop in Bitcoin occurred in 2017, not during the 'Santa Claus rally'. At that time, the price of Bitcoin fell by 21.30% before Christmas. In addition, Bitcoin also experienced smaller declines before Christmas in 2015 and 2019, which were 1.37% and 0.11% respectively. After Christmas, the price of Bitcoin dropped between -0.04% and -6.42%. Please provide the text to be translated. In other words, if a speculator participates in the 'Santa Claus rally' of Bitcoin every year from 2014 to 2023, buying and selling a week before Christmas, the average return is 1.32%; and performing the same operation a week after Christmas, the average return is 1.29%. In contrast, if the speculator chooses to participate in the price fluctuations of Bitcoin throughout December, the average return rate is 9.48%, at least 7 times the return of the 'Santa Claus rally'.

However, similar to the 'Santa Claus market' in the encryption market, the 'Santa Claus market' effect of Bitcoin also exhibits inconsistent characteristics.

3. The "Santa Claus effect" of the encryption market in the past 10 years

The following is the "Santa Claus effect" data based on the percentage change in the total market value of encryption on a daily basis:

Source: CoinGecko

Bitcoin's "Santa Claus effect" data over the years, based on the daily percentage change in the Bitcoin price over each specific time period:

Image source: CoinGecko

4. Conclusion: Methodology

This study is based on the data from CoinGecko, examining the percentage change in total market value of encryption currencies on a daily basis over the past ten years (i.e. from December 1, 2014 to January 2, 2024). The study refers to the two most commonly used definitions of the "Santa Claus Rally" or "Santa Claus Effect" in Investopedia:

Pre-Christmas period: Refers to the week before Christmas, from December 19th to 25th.

Late Christmas: Refers to the last five trading days of the year plus the first two trading days of the next year.

This study is for illustration and information reference only, not for financial advice. Before investing in any encryption currency or financial asset, please conduct your own research and operate prudently.

【Disclaimer】There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice. Users should consider whether any opinions, viewpoints, or conclusions of this article are suitable for their specific situation. Any investment made based on this is at your own risk.

This article is authorized for reprint from: "Foresight News"

Originally written by Lim Yu Qian

'What is the Christmas market? How does it affect the encryption market? Data: The historical rise has fallen by about 10%.' This article was first published in 'Encryption City'.