Bitcoin has historically had an uptrend in December. With the already massive 98% gain year-to-date, will we see yet another uptrend in December 2021?
Let’s address the chunky elephant before we start — Bitcoin is down about 13% from its highs of $68,521.
We’re at the level some finance guys would even consider it a “crash”. Truthfully, Bitcoin has seen better days, but let’s not forget, not many better years.
It’s still up about 98% from the start of the year — that’s a few percentage points more than any traditional assets. And we all know that’s an understatement.
Now that we’re at the last stretch of the year, we’re edging closer to the phenomenon repeatedly seen over the past years — A Christmas Bump — a period leading towards January where it’s common to see Bitcoin on an upward trend.
Bitcoin, 1 December 2016 to 31 December 2016
Bitcoin, 1 December 2017 to 31 December 2017
Bitcoin, 1 December 2018 to 31 December 2018
Bitcoin, 1 December 2019 to 31 December 2019
Bitcoin, 1 December 2020 to 31 December 2020
As of 3 December, Bitcoin is up about 98% year-to-date and it’s looking similar to 2016, 2017, 2019, and 2020. Out of these four years, three of them had their trend continue into December, adding on to the year’s gains.
The reasons for this speculation aren’t arbitrary either. It’s a combination of multiple elements that enables this month to greatly outperform other months. And for this year, it is looking just as promising as the positive catalysts line up.
So, who’s buying them?
Retail Market
For the past few years, Bitcoin’s explosive moves in November have made it an unmissable topic at the Thanksgiving dining table. Adding to this is the fact that Bitcoin has grown at an unprecedented rate each year, dwarfing almost every other traditional asset.
On top of that, with the help of influential people like Elon Musk and the constant buzz created by headlines with a grandiose three-figure percentage return in a year, the Internet is now plastered with talks around cryptocurrencies.
Everyone has heard of this term by now, but only a few are invested in them.
For those that are not invested, hearing these figures tends to incite a certain emotion in them. “It should have been me”, “It could have been me”, and “It would have been me if I had....”
Translated, this is something traders and investors know all too well but is only ever clear in hindsight — FOMO — the fear of missing out on something even greater.
Being able to notice this among other traders or investors is almost always a buy indicator, as what comes next is a wave of buyers coming into the same asset (Bitcoin) at the same time. In this case, giving the last month of the year a final push before heralding the new year’s.
Institutions
Just a few years ago, transacting in Bitcoin is considered a laughable notion.
“It’s too volatile” has become a phrase we’ve become too familiar with. But over the past year, fueled by the economic effects of the COVID-19 and controversy revolving around Robinhood and GameStop, sophisticated investors have begun to look for an alternative.
One of which is Bitcoin.
What followed suit was the assemblage of companies that also wanted to be involved. These companies are Microstrategy, Tesla, Square, and Coinbase. Together, they have over $12 billion invested in Bitcoin.
Not just the acquisition of Bitcoin and owning it for the sake of owning it or storage of value, but more and more companies are looking to have an integrated crypto payment system.
Twitter ($TWTR), had introduced their tipping feature, which includes using cryptocurrencies to their platform. Analysts are betting their money on Amazon to include cryptocurrencies as a payment method. And Facebook’s Novi, a digital currency wallet, is rather obvious proof that they’re working on it behind the limelight.
Combining the fact that companies are buying Bitcoin as a storage value and building the technologies that enable their crypto transactions, leads to more demand for cryptocurrencies. From both the institutional side and, eventually, the retail side.
Countries
Not even a decade back, all the talks were about how much gold does a country has. Today, presidents take it to Twitter to express their thoughts on Bitcoin and inflation.
Oh, what a world we live in!
The country that has been at the forefront of all of these is, of course, El Salvador. Their president, Nayib Bukele, has almost become a celebrity in the Crypto Twitter community because of his tweets around ‘buying the dip’ every time Bitcoin sees a price drop. As of the latest, El Salvador is reported to have over 1000+ Bitcoins in its reserves.
Though El Salvador is the only country with Bitcoin as a legal tender, there are more than a handful of other countries already in talks about doing the same thing. Paraguay, Panama, Brazil, Mexico, and Argentina, just to name a few.
The biggest reason why giant tech corporate’s and countries’ decisions make a difference is that they are the parties that will ultimately herald the mass adoption of cryptocurrencies. And with the amount of money these parties have compared to retail buyers, it is something to keep an eye out for.
Spot Crypto ETF
One of the biggest themes that sent Bitcoin on an upward trajectory this year was the notion of having a crypto ETF. But the SEC, the U.S. Securities and Exchange Commission, has said no over and over again. And then the news of an ETF that involves Bitcoin hit the streets. This was the ProShares Bitcoin Strategy ETF, otherwise known as $BITO.
But investors who were anticipating this event were quickly disappointed as they realised this is only a Bitcoin Futures ETF, not a Bitcoin Spot ETF. In simple terms, a Bitcoin Futures ETF does not directly track Bitcoin’s prices, and it’s not ideal to hold as a long-term investment due to its high cost. Speculators even highlighted that the SEC only approved this ETF due to its nature of being a futures investment.
On 2 December, painted all across the biggest financial publications, is the news that Fidelity is set to launch a cryptocurrency ETF. What’s, even more, is that it’s reported to be a spot ETF. The caveat is, this will be launched on the Toronto Stock Exchange, so not exactly available to US investors directly.
Regardless, having a top-tier fund manager launch an ETF that is directly involved with the underlying asset is, in most perspectives, a big win for Bitcoin and the cryptocurrency space as a whole.
Closing Thoughts
It’s arguably irrefutable to say Bitcoin has had an eventful year, and along with it, the entire crypto industry. But even with all that is happening and JP Morgan’s prediction that Bitcoin will hit $146,000 in the long-term, it is not to say it won’t keep performing the nose dive stunt and trigger all the stop losses while at it. Heck, maybe even giving President Nayib Bukele yet another opportunity to paint Twitter with his thoughts on buying the dip.
But with our data and the news coverage around this, it is more than likely that we will be seeing the Bitcoin charts reaching for the top right corner of your screens.
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