Bitcoin missed out on Saint Nick’s sleigh this year.
Instead of a festive Santa Claus rally, the top cryptocurrency has trudged into Christmas with prices down 30% from October’s all-time high despite macroeconomic headwinds.
David Brickell and Chris Mills, analysts at the London Crypto Club, said in a weekly newsletter that while a “Goldilocks” combination of global interest rate cut cycles and rising liquidity drove strong returns for stocks and gold, Bitcoin has disappointed investors.
“Despite various positive idiosyncratic drivers for Bitcoin, with supportive developments from the U.S. government reinforcing the institutional adoption story, and despite setting an all-time high above $126,000 in early October, as we write, Bitcoin is down around 5% year-to-date relative to the U.S. dollar and around 40% relative to gold,” the pair said.
According to Brickell and Mills, there are four reasons why Bitcoin prices will fall in the final period of 2025.
Brickell and Mills said Bitcoin’s poor performance in recent months is rooted in steady, price-insensitive selling.
“We are seeing heavy selling from long-term ‘OG’ holders who, after multiple cycles, are starting to allocate aggressively around the psychologically important level of $100,000,” they said.
This strategic selling is weighing on Bitcoin’s price despite supportive fundamentals.
Brickell and Mills said a self-reinforcing belief in Bitcoin’s four-year cycle is also having a detrimental effect on prices as traders seek to stay ahead of each other.
Approximately every four years, Bitcoin undergoes an event called a halving. The event will halve the rewards paid to miners for creating new blocks.
This reduces the supply of new Bitcoin entering the market and increases the pressure on Bitcoin miners.
In past cycles, prices have tended to rise strongly in the months following a halving, then peak and then fall as the excitement fades and early investors take profits.
Since this pattern has repeated itself several times, many traders now expect it to happen again, and they act on this belief by selling.
To be fair, there is a growing consensus that the four-year cycle narrative should be consigned to the dustbin of history.
Grayscale and Bitwise analysts and Binance co-founder Changpeng Zhao, among others, said institutional adoption, regulatory clarity and the maturity of the crypto industry mean the factors that drove previous halving cycles have significantly weakened.
Even so, it’s clear that not every trader is willing to abandon their four-year cycle strategy.