Is this December a good time to buy Bitcoin?
Some say there’s no gift like the present, especially during the year-end holiday season. Because that’s when equities and cryptocurrencies historically deliver most of their positive yearly returns.
“A Santa Claus rally is the sustained increase in the stock market that occurs around the Christmas holiday on Dec. 25,” an entry on Investopedia last year reports. “Most estimate these rallies happen in the week leading up to the Christmas holiday, while others see trends that begin Christmas Day through Jan. 2.”
But it’s not just the seasonal bump going for Bitcoin and cryptocurrency markets this month. There are also broad macro trends in the little orange coin’s favor. Meanwhile, there are fundamentals in BTC’s supply on-chain and on exchanges.
To top that off, the Trump bump for most equities and crypto assets after his historical election win is very real. Given his pro-growth agenda for cryptocurrency, markets expect that to weigh heavily in Bitcoin’s favor as his administration gears up.
Here are five reasons Bitcoin bulls expect BTC’s price to rally further through December and into the New Year.
1. Fed Expects to Cut Rates Again in Dec
Cryptocurrencies like Bitcoin usually rally over the long term during low Federal Reserve interest rate regimes, in addition to corporate sales and stocks. With rates held down to near 0% for years after the financial crisis of ’08, Bitcoin grew in leaps and bounds from nothing to $20,000 per BTC by Dec. 25, 2017.
Then, when the Fed raised rates through 2018, Bitcoin’s price collapsed into what markets called the “crypto winter.”
After that, the Fed cut rates to zero again in response to the global coronavirus pandemic in 2020. That led to new all-time high prices for BTC and many altcoins. Then the central bank went back to raising interest rates at the beginning of 2022.
Now that the Fed is back to cutting rates again, Bitcoin has roared with bullish approval. The price is flying past new all-time highs in December and shows no signs of slowing down. Daily exchange volume has increased in pace with the higher prices.
A top Fed official said at the beginning of December that the Fed is ready to cut rates again at its December meeting on the 17th and 18th. “At present, I lean toward supporting a cut to the policy rate at our December meeting,” said Christopher Waller, a key Federal Reserve official.
2. Bitcoin Supply Cycle In Mid-Swing Straight Up
#Bitcoin Cycles Timeline. I don’t make the rules.
2016-2020
Halving to Peak: 525 days
Peak to Bottom: 364 days
Bottom to Halving 518 days2020-2024
Halving to Peak: 532 days
Peak to Bottom: 371 days
Bottom to Halving: 532 DaysThe next halving date is March 26, 2028. Look how… pic.twitter.com/0305klH4WQ
— Brett (@brett_eth) December 7, 2024
The dovish Fed rate regime is bullish for Bitcoin, but the supply cycle is also heavily in favor of BTC bulls. Hard-coded into Bitcoin Core, the app for running Bitcoin, is a 50% cut in daily new supplies every four years.
That’s akin to the Fed raising its rates every four years, which would make each dollar stronger in purchasing power as time goes on. Instead, the Fed lowers its rates to make each dollar weaker so consumers and businesses will spend faster and make up the difference with economic growth.
However, Bitcoin is designed to increase the spending power of its long-term holders. Rather than increasing its new supplies and decreasing its buying power, BTC decreases the new supply rate to shore up and consolidate its buying power.
3. Nov Blowout in Crypto Exchange BTC Outflows
While the daily new supplies in Bitcoin fell by half earlier this year, the availability of BTC tokens to trade on crypto exchanges has also drastically declined. That drop in exchange liquidity is a strong price support for Bitcoin over the long term.
30-day crypto exchange outflows topped 58,440 BTC (worth $5.58 billion at the time) on Tuesday, Dec. 3, according to data from CoinGlass. By Dec. 7, just four days later, that trailing 30-day figure had risen by an extreme amount to 116,259 BTC.
That represents conviction among long-term holders and the intention to save rather than cash out their Bitcoin.
4. The EOY Sales Bump
Most businesses blow out their annual revenue quotas only in the final stretch of the calendar between Nov. 1 and New Year’s Eve. The New York stock market is no different and neither is Web3’s Bitcoin blockchain.
According to an article in Nasdaq, a popular website for stock market traders, “Historically, Q4 is Bitcoin’s strongest quarter, and November has often been a standout month. December, which has also performed well in past bull cycles, presents a promising outlook.”
In terms of its total dollar increase, Bitcoin’s price rose further in one month this past November than any month in its history. That portends a strong Santa Claus rally if market sentiment remains unchanged through the new year.
5. Pro-Bitcoin Republicans Hold Washington
Donald Trump tolerated Bitcoin in his first term. In his second term, he’s pushing for government understanding and pro-growth regulations that leave room for more innovation in blockchain.
A Dec. 6 segment on CNBC, a popular news outlet for the financial and investing class, highlighted the bevy of pro-crypto nominations for Trump’s second administration. As the incoming president made his selections, Bitcoin’s price on crypto exchanges hovered near a historic high of around $100,000.
As Mr. Trump said in a speech to the Bitcoin Conference in Nashville, TN, in July, while campaigning for the presidential election in November, “Those who say that Bitcoin is a threat to the dollar have the story exactly backward.”
