Bitcoin correction weakest of 2021 so far, as hopes of Santa Claus rally rise
In previous bull market cycles, there has been a measurable correction before a rally at the end of the year — and if history rhymes it could be on the cards again.
We’ve certainly experienced the correction: Bitcoin hit an all-time high of around $69K on Nov. 10 and has retreated around 17% to current levels.
Some mainstream media outlets such as Forbes have taken the view the current pullback has plunged markets back into bearish territory with the rather salacious headline: “Did Bitcoin Enter A Bear Market After Falling 20% From Its ATH?” on a Nov. 30 article.
But November’s dip was actually the weakest correction of 2021, overshadowed by Bitcoin’s whopping 53.4% correction over three months between April and July. The most recent correction in September was the second deepest, reaching 37% from April’s ATH.
In its Nov. 29 “Week Onchain” report, analytics provider Glassnode argued that the current correction is just “business as usual for Bitcoin hodlers” hinting that it may soon be over. It also confirmed that this current market correction is “actually the least severe in 2021.”
Barring a stock market plunge due to the Omicron variant situation becoming worse, some believe we may be on track for a Santa Claus rally. It’s a term from the stock market when prices rise during the last 5 trading days in December and the first 2 trading days in January, however, it has also been noted in crypto markets in previous years and is often shorthand for price rises throughout December.
Last December, saw a 47% surge in BTC prices throughout the month and December in 2017 witnessed an 80% pump to a new all-time high at the time. Both were in bull markets like today.
At the time of writing, BTC was trading at just over $57K so a Santa Claus rally similar to last year could see prices surge to top $80K before the year is out.
8848 Invest co-founder Nikita Rudenia is also confident about a Santa Claus rally commenting:
“Despite the obvious setbacks thus far, Bitcoin is still on track to close the year at $70,000 per coin and, should this feat be achieved, we may see the coin touch $75,000 in early 2022 before we get a major correction.”
Interestingly Ether is currently outperforming. The ETH/BTC ratio is the highest it has been since mid-May at 0.082 BTC per ETH or around 12 ETH per BTC according to CoinGecko. This could see ETH lead further price gains in December.
After taking a deep dive into the on-chain patterns, Glassnode concluded that Bitcoin investors are in more profitable positions than during September’s correction.
“Both Long and Short-term Holders are holding more profitable supply than September’s correction, which can generally be viewed as constructive for price.”
Glassnode reported that the total proportion of profitable supply held by short-term holders has increased by 60% since September. It summarized “in bull market conditions, this combination usually sets out a fairly constructive short-term outlook.”
Hopes of a Santa Clause rally, therefore, are starting to grow. Such a spurt at the end of the year can be attributed to a number of factors such as holiday cheer and increased liquidity due to Christmas bonuses.
However, the new Omicron variant could put a dampener on the party if there is a major impact on global financial markets and more lockdowns are enforced or seem likely. According to Nasdaq, investors may be on the sidelines for the time being until more is known about the new viral strain.
On the upside, Bitcoin was trading at just $18,857 this time last year.
View Original Source Here
Author: Cointelegraph By Martin Young