Bitcoin’s Q4 Underperformance: A Departure from Historical Trends
As 2024 draws to a close, Bitcoin (BTC) is struggling to live up to its typical year-end performance, defying its usual “Santa rally.” Historically, the fourth quarter has been one of Bitcoin’s strongest periods, but this year, the largest cryptocurrency is underperforming.
Bitcoin usually sees a gain of about 2.8% in the 51st week of the year, but this time it’s on track for an 11% decline. Additionally, while it often experiences a 3% gain in week 52, the past six years have seen price drops in five of them, providing little optimism for a strong finish this year. The “Santa rally,” which typically occurs as December transitions into January, seems unlikely to materialize this time around.
The trend also extends to the entire fourth quarter. Historically, the final three months have been a strong period for Bitcoin, with an average increase of 85% since 2013, according to Coinglass data. However, in 2024, Bitcoin has seen less than half of that growth.
This current downturn mirrors the start of 2021, though slightly later than the typical timing for a Santa rally. On January 8, 2021, Bitcoin was valued at around $40,000. By January 27, the price had dropped to $30,000, marking a 25% decline—greater than the current 15% slide. However, that drop occurred in the midst of a bull run that began in December 2020 at around $10,000 and reached $70,000 by November 2021.
One similarity between the two periods is that the realized price—the average on-chain cost for all tokens in circulation—has continued to rise. This suggests that, on average, investors are buying Bitcoin at higher prices, which could indicate long-term optimism. At the same time, the price of Bitcoin remains above 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 stayed above the STH RP, using this level as support during its bull run. This pattern is typically seen in bull markets. Currently, the STH RP stands at $84,000, indicating that the bull market may still be intact as long as Bitcoin stays above this critical level.
