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Does Christmas Have an Effect on Bitcoin Price?

On 5th December, Bitcoin jumped past $44,000 for the first time since the FTX collapse in 2022. It is speculated that the price will continue to soar as the holiday season approaches. Historically, every year, Bitcoin’s price has surged during the weeks leading up to Christmas. This is primarily due to the heavy volume of transactions during holidays, as Bitcoin’s price is mainly determined by its supply and demand.

In this blog, we will review Bitcoin’s price trend during the holiday season over the years and explore how Christmas affects its price. Here we go!

Bitcoin’s Price History During Christmas

Over the years, Bitcoin’s price has seen a sudden spike in its price during the fourth quarter of the year due to the festival season. For instance, in 2016, Bitcoin’s price grew approximately 63% from October until the end of December. The trend continued in 2017 when Bitcoin gained 267% during the same period. However, Bitcoin’s price took a significant hit during the last quarter of 2018 and 2022. This was primarily due to the Bitcoin crash in 2018 and the consecutive collapses of exchange firms like FTX in 2022.

For the remaining years, Bitcoin has shown an upward trend during the last quarter of the year. Here’s a chart indicating Bitcoin’s price during that period:

Year Price (Oct-Dec)
2012 $12.4 – $13.5
2013 $140 – $805.9
2014 $322.9 – $378
2015 $237.1 – $430.0
2016 $613.4 – $963.4
2017 $4,403.1 – $13,850.4
2018 $6,608.2 – $3,709.4
2019 $7,422.7 – $7,530.8
2020 $10,620.5 – $28,949.4
2021 $47,666.9 – $50,779.9
2022 $19,311.9 – $16,537.4
2023 $27,974.5 – $44,076.2

While it is hard to accurately predict Bitcoin’s growth in any time period, experts believe Bitcoin prices typically bump as the holiday season approaches.

Holidays Show Direct Correlation in Bitcoin Price Increases, But Why?

Holiday investing

The good cheer and optimism around holidays make traders bullish. As a result, an overwhelming number of people start their Bitcoin journeys during this period. And because Bitcoin’s supply is limited to 21 million coins, its price soars as the demand increases.

New Year’s anticipation

This is also a holiday effect where stocks tend to perform exceptionally well in the first few weeks of the new year. That is why some investors buy stocks in late December to cash in on their investments later. Bitcoin experiences a similar phenomenon during the holiday season, which causes its price to increase.

Tax implications

The year-end is the best time for investors to adjust their portfolios for taxes. Most people actively trade stocks during this time to settle their tax obligations. This triggers heavy movement in Bitcoin, leading to a steep price rise.

Window Dressing

Window Dressing refers to the practice where fund managers add high-performing assets to their portfolios at the end of the year to improve their annual reports. Thus, a lot of institutional investors buy Bitcoin in the weeks preceding Christmas, which boosts its price during the holiday season.

Low trading volume

During the holiday season, many institutional investors and traders are not actively trading as they might be traveling or on vacation. This results in violent stock price movements. Thus, the Bitcoin price may fluctuate significantly even when a small group of traders are buying or selling.

Investors believe it is the best time of the year

Like every disclaimer preceding investing advice would say, past performances do not guarantee future results. Just because the Bitcoin market usually performs well at the end of the year doesn’t mean it will always. However, most investors tend to bet their money, expecting better returns for their investments. This makes Bitcoin’s price go up during the last weeks of the year.

Final words

The holiday season certainly brings with it a jingle of happiness and if the theory of Bitcoin’s price hike during the last quarter of the year holds true, Bitcoin may continue to rise beyond $45,000.

While 2022 wasn’t the best year for Bitcoin, this year is a lot more promising, thanks to the upcoming changes in crypto investing options. With Bitcoin’s ETF due and the next halving just around the corner, investors are looking at its future optimistically.

Bitcoin is certainly a lucrative investment option and can also be a hedge against inflation. With the US dollar declining at a staggering rate, now is the right time to embrace Bitcoin for the stability, security, and sustainability it offers.

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