Bitcoin's Santa Rally Threatened by Hawkish Fed. What History Says Comes Next. — Barrons.com
2024-12-19
Category: None

By Elsa Ohlen
Bitcoin's sharp reaction to comments by Federal Reserve Chair Jerome Powell Wednesday may have investors question if the world's largest crypto can pull off a Santa rally this year — a sustained price increase often occurring around the Christmas holiday.
History says maybe despite the token briefly falling below $100,000 Wednesday after the Fed flagged an easing of the interest rate cutting cycle next year.
Bitcoin has risen in four out of the past 10 years in the period between mid-December and New Year's Eve, according to Dow Jones Market Data. It rose by double digits in three of those years, in 2016, 2018 and 2020 when it rallied 24%, 16% and 52%, respectively. On average, Bitcoin has risen 5.4% in the period before and after Christmas.
Cryptos are generally considered to be a more risk on investment and tend to rise when the Fed cuts rates.  But that didn't happen Wednesday as cryptocurrencies including Bitcoin, XRP, Ethereum, and Solana all declined. The reason for that anomaly could be Powell's comments on the 2025 rate cutting cycle.
It put somewhat of a wet blanket over the crypto frenzy that has captured the market since Donald Trump won the presidential election.
Bitcoin is up 50% since Nov. 5, much due to expectations that the incoming administration will boost cryptos and loosen regulation of the sector.
Bitcoin was falling Thursday, down 2.2% over the past 24 hours to $101,872, according to CoinDesk data.
On Wednesday, it saw the largest one-day drop since August, according to Dow Jones Market Data, but the digital token is still up about 130% in the last 12 months.
Write to Elsa Ohlen at elsa.ohlen@barrons.com
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