Key Points
- Bitcoin and Ethereum have exhibited similar netflow patterns around the Christmas period.
- The Open Interest trends indicate a cautious sentiment among traders during the festive season.
Bitcoin [BTC] is known for its Santa Claus rally in the week leading up to Christmas, before giving up those gains the following week. This has been the trend in recent years, beginning in 2021. The previous year, however, did not follow this pattern.
Along with Bitcoin, other major altcoins like Ethereum [ETH] and Dogecoin [DOGE] have typically seen their prices drop in the week after Christmas. The question that arises is whether this trend will persist in 2024.
Exchange Flows and Price Correlation of Major Assets
AMBCrypto analyzed the flow of BTC and ETH to and from exchanges around Christmas. A 7-day moving average was utilized to normalize the readings. In 2023, BTC saw a 7-day MA of 1,481 BTC inflow on 22 December, while the 7-day ETH inflow was 32,805. A few days later, the direction reversed.
The moving averages for exchange netflows for BTC and ETH hit -5,915 and -9,626 for BTC and ETH, respectively, on 26 and 27 December. This indicated accumulation. Simultaneously, the price trends for the tokens were flat for BTC and increased by 10% for ETH, heading into the final week of the year. These metrics suggest that participants preferred to send tokens to exchanges to realize some profits and then accumulate more the following week.
The Santa Claus Rally of 2024
The Santa Claus rally of 2024 took BTC to $99.6k, ETH to $3,560, and DOGE to $0.342, with gains of 6%-9% in the three days leading up to Christmas. At the time of writing, exchange netflows were on the rise, indicating that selling pressure was likely on the horizon. Meanwhile, the prices of BTC and ETH had already dropped by 5% and 6% respectively, with Dogecoin losing nearly 9%.
The Open Interest of Dogecoin, Ethereum, and Bitcoin can also be compared. In 2023, the OI dropped sharply from 22 to 25 December, before bouncing back quickly in the first two weeks of January. In 2024, a significant OI drop was observed on 17 December. This could be due to the market-wide decline following bearish news from the Federal Reserve that caused the Dow to fall 1,250 points the previous Wednesday.
The OI continued to fluctuate sideways, suggesting that market participants remained on the sidelines. Traders could be looking for long entries. A surge in OI and volume in the coming days might result in the early 2024 gains being repeated in January 2025.
