A phenomenon known as the “Santa Claus rally” is expected in the crypto world, where stocks and other assets experience a surge in value at year-end. However, this rally has yet to materialize in the cryptocurrency market, with top cryptocurrencies like Bitcoin, Ethereum, and Dogecoin experiencing significant declines.
Trading volumes are thin due to the holidays, which is common in both equities and cryptocurrencies. Despite this, today’s selling pressure has been notable, pushing Bitcoin below $100,000 and taking Ethereum around $3,300 and Dogecoin down to $0.31.
Experts point to higher interest rates as a reason for investors rethinking their core investing thesis on cryptocurrencies. Some see these assets as a store of value, while others view them as riskier investments. The use of long derivatives contracts suggests that leveraged bets are being unwound, potentially due to the high volatility in the crypto ecosystem.
The strong US dollar and capital flowing out of other asset classes towards money market funds may also contribute to a lack of Santa rally in crypto. It remains uncertain whether the trend will change in 2025, but long-term charts suggest that many assets, including cryptocurrencies, tend to move upward over time.
While it’s impossible to predict short-term trends with certainty, compounding can still occur for a long time, as demonstrated by Bitcoin’s long-term chart.
Source: https://www.fool.com/investing/2024/12/26/why-bitcoin-ethereum-and-dogecoin-dipped-following