Bitcoin’s Most Bullish Quarter: Why Q4 Historically Drives Big BTC Gains
Explore the historical performance of Bitcoin during the fourth quarter and discover the factors driving its consistent gains. l Credit: Hameem Sarwar/CCN.com
Key Takeaways
- Bitcoin has consistently demonstrated strong performance during the fourth quarter.
- Factors such as tax considerations, holiday season spending, and corporate adoption contribute to the increased demand for Bitcoin in Q4.
- Bitcoin’s price trajectory depends on breaking through key resistance levels and maintaining upward momentum.
Bitcoin (BTC) has a history of strong performance during the fourth quarter, with October, November, and December often delivering significant gains. This trend is evident in the cryptocurrency’s historical data, which shows consistent upward momentum and average returns well above other quarters.
Will be the same in the last three-month period of 2024? Let’s see what past performance and technical analysis say.
Bitcoin Historical Performance in Q4
October has often been the start of Bitcoin’s Q4 rally . The data shows notable performances, including a 27.7% increase in 2020 and a 47.8% gain in 2017. Despite some occasional declines—such as in 2018 and 2022—Bitcoin’s average return for October over the years is an 8.9% rise, indicating that this month is historically favorable for the cryptocurrency.
BTC’s performance in November further solidifies the bullish sentiment seen in the last quarter. With major spikes like 53.5% in 2017 and 43% in 2020, it’s clear that November has been one of the most profitable months for Bitcoin holders. Even in less dramatic years like 2016 – with a 5.4% rise -, Bitcoin still posted consistent gains. On average, Bitcoin has seen a 22.9% return during November, reflecting strong upward momentum.
Although December’s performance has been somewhat more varied, it has still shown strong positive returns in certain years. In December 2020, for instance, Bitcoin rose by 46.9%, while in 2017, it gained 38.9%. While December isn’t always as bullish as October or November—with some drops like in 2017, 2018, and 2021—the average performance remains positive at 1.8%.
The trend that emerges is that Q4 is Bitcoin’s strongest quarter, both in terms of average and median returns. The average Q4 rise is 27.7%, with the median return being 30.8%, making Q4 a period where significant price growth occurs more frequently than any other quarter.
What Drives BTC Gains
Bitcoin’s rally during this time is often attributed to increased investor interest, broader market optimism, and strategic positioning for the year ahead. Its historical gains during Q4 can be attributed to a variety of interconnected factors that create a favorable environment for price increases.
As the year comes to a close, investors often turn their attention to tax considerations. Many may feel compelled to realize gains or losses in their portfolios before the year ends, which can lead to a surge in demand for Bitcoin. This strategic maneuvering is particularly pronounced among those looking to optimize their tax situations, and it often results in increased trading activity.
The holiday season also plays a significant role in shaping Bitcoin’s performance during this period. Increased consumer spending typically accompanies this time of year, which can indirectly boost interest in Bitcoin as both an investment vehicle and a payment method. As more people engage in shopping and transactions, the visibility of cryptocurrencies like Bitcoin grows, attracting new investors who may see it as a viable alternative to traditional currencies.
Corporate adoption is another key driver. Some companies choose to allocate a portion of their year-end profits to Bitcoin or other cryptocurrencies, viewing them as long-term investments. This trend reflects a growing institutional acceptance of Bitcoin, which can bolster overall market confidence and further increase demand.
What to Expect in 2024
Crypto analysts have positive views about the potential for a bull run in Q4 2024. To drive this surge would be seasonal trends, macroeconomic factors, and cryptocurrency-specific dynamics. Deutscher emphasizes that these elements will significantly influence the market’s trajectory in the coming months.
Seasonality plays a key role; historically, Q4 has been the strongest period for both equities and cryptocurrencies. Since 1945, the S&P 500 has averaged a gain of 3.8% in this quarter, with Bitcoin showing similar resilience, reinforcing the idea of seasonal influences.
It’s also worth to mention highlights the impact of the upcoming U.S. federal election. A Donald Trump presidency could benefit the cryptocurrency sector, given Trump’s open support for Bitcoin. A Kamala Harris victory might present regulatory challenges. However, it’s not sure it’s going to be disastrous for the industry.
Additionally, the potential for inflation control and interest rate cuts could further support Bitcoin. Recent CPI data indicates that inflation is being managed, and if the Federal Reserve signals lower interest rates, it may create a favorable environment for risk assets like cryptocurrencies.
With global liquidity on the rise, which analysts identify as a major influence on Bitcoin, the combination of these factors could set the stage for significant market growth in Q4 2024.
Technical Analysis
Bitcoin’s price remains in a bullish trend, supported by a price above $60,400. To sustain this upward momentum, Bitcoin must break through the $64,600 resistance level. Further resistance levels at $65,600, $67,400, and $70,400 need to be cleared for a stronger uptrend.
If Bitcoin surpasses $70,400 with significant momentum, it could potentially reach $81,400. However, this level might act as a short-term resistance due to its proximity to the 18% horizontal channel.
A decline to the $45,000 range could lead to an oversold market, which would increase the likelihood of a rebound or dead-cat bounce. In case of a severe market downturn, aggressive investors seeking a potential bottom would consider a limit order of around $31,000.
Bitcoin‘s path to $100,000 by the end of 2024 remains viable. Breaking through the $72,000 resistance could pave the way for a significant uptrend toward $120,000.
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