In previous bull cycles, there has been a measurable pullback before a year-end rally -- and if the historical trajectories match, this could happen again.
We have indeed experienced a pullback: Bitcoin reached an all-time high of about $69,000 on November 10 and is now down about 17%.
Some mainstream media such as "Forbes" believe that the current correction has brought the market back into a bear market, using such a headline in an article on November 30: "Bitcoin enters a bear market after falling 20% from its all-time high ?"
But the November drop was actually the weakest correction so far in 2021, compared with Bitcoin's sharp 53.4% correction in the three months from April to July. The most recent correction, in September, was the second-largest, down 37% from April's all-time high.
In a “Week Onchain” report published on Nov. 29, analytics provider Glassnode argued that the current correction is simply “business as usual for Bitcoin holders,” suggesting that the correction may end soon. It also confirmed that the current market correction is "actually the least severe of 2021".
Some believe we could be in for a Santa Claus rally unless the stock market plummets as things get worse with the Omicron variant. This is a term that comes from the stock market and refers to the price increase in the last 5 trading days of December and the first 2 trading days of January, however, it has also been noticed in the crypto market in previous years, usually throughout December Short for Monthly Price Increase.
In December last year, the price of BTC rose by 47%, and in December 2017, the price of BTC rose by 80%, hitting a record high. Both were in a bull market like today.
At the time of writing, Bitcoin is trading at just over $57,000, so if there is a Santa Claus rally similar to last year, the price of Bitcoin could surge to $80,000 by the end of the year.
Nikita Rudenia, co-founder of 8848 Invest, is also confident in Santa’s rebound, commenting:
“Despite the notable decline so far, Bitcoin is still on track to close the year at $70,000 per coin, and if this feat is achieved, we could see Bitcoin hit $75,000 in early 2022 before There's going to be a big correction."
Interestingly, Ethereum is currently doing quite well. According to data from CoinGecko, the ETH/BTC ratio reached its highest level since mid-May at 0.082 BTC per ETH, or about 12 ETH per BTC. This could allow ETH to lead further price gains in December.
After conducting an in-depth study of on-chain patterns, Glassnode concluded that Bitcoin investors are currently in a better position to make money than they were during the September pullback.
"Both long-term and short-term holders are holding more profitable supply than in the September correction, which can generally be seen as constructive for prices."
Glassnode reports that the overall percentage of profitable supply held by short-term holders has increased by 60% since September. "In a bull market situation, this combination usually offers a fairly constructive short-term outlook," it concluded.
So hopes for a Santa bounceback are starting to improve. Such a rise at the end of the year can be attributed to a number of factors, such as the festive atmosphere, and increased liquidity from Christmas bonuses.
However, the new Omicron variant could deliver a Christmas blow if financial markets around the world are significantly affected, with more lockdowns imposed or likely imposed. According to Nasdaq, investors may stay on the sidelines until more is known about the new virus strain.
On the bright side, Bitcoin was trading at just $18,857 this time last year.
Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.
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