The final days of a year are typically intense in the markets, as lower volatility makes the impact of individual trades greater and holiday cheer boosts investor morale.
In 2024, however, the so-called “Santa Rally” was truly spoiled on December 30, as the stock and cryptocurrency markets experienced a significant downturn.
The crypto market, in particular, looked bloody as the cumulative valuation of digital assets collapsed by around $200 billion, from $3.36 trillion at the start of December 25 to $3.15 billion dollars at the time of publication, according to Trading View data.
Why the ‘Santa Rally’ Was Replaced With a ‘Grinch Slow Down’
The lack of a “Santa rally” – or, perhaps, the presence of the “Grinch downturn” – can largely be attributed to a relatively expected correction and consolidation phase following a massive upsurge, such as, for example, the market cap of cryptocurrencies skyrocketed to $1.4. trillion dollars, from $2.29 trillion at the beginning of November to $3.69 trillion on December 17, an increase of 61.14%.
Moreover, it fell as part of a broader slide as the latest meeting of the Federal Open Market Committee (FOMC) reignited fears of weakening stock markets and a likely rise in the inflation rate in 2025.
Indeed, while digital assets, led by Bitcoin (BTC), which rose from around $108,000 in mid-December to $91,687 at press time, have garnered attention, the stock index S&P 500 is down 2.83% since December 17.
Additionally, top stocks like Amazon (NASDAQ: AMZN) and Tesla Motors (NASDAQ: TSLA) are down 5.17% and 13%, respectively.
Will the crypto market continue to recover in 2025?
Still, it’s worth pointing out that the latest decline, despite wiping large amounts of wealth from the markets, did little to dampen the overall rise in digital assets – as well as tech stocks and gold – in 2024.
In fact, while the $200 billion wipeout in 5 days is staggering and has undoubtedly been painful for many investors, the cryptocurrency market is still up $1.47 trillion in 2024 as he started the year with a market capitalization of $1.67 trillion.
Finally, the latest downturn does not necessarily indicate further trouble ahead as there is, at least as of the December 30 publication, some sort of consensus that the bull market will persist into 2025, with Bitcoin leading the way with targets stellar prices that vary. from a minimum of $220,000 to a maximum of more than $800,000.
Featured image via Shutterstock
