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Crypto Potato 2024-12-24 12:58:27

Santa Claus Rally: Should I Buy High Tech Stocks pr Crypto? (Op-Ed)

Despite the Federal Reserve’s recent rate cut by another quarter percentage on Wednesday, Bitcoin’s price plummeted. The asset tumbled by up to 15% at one point. Meanwhile, this all-important vital sign for the health of the Web3 blockchain economy remains down 3.5% for the 30 days ending Dec. 24. But it wasn’t just Bitcoin and crypto markets that slumped. Tech stocks in the NASDAQ Composite also tumbled 3% over the last five trading days on Wall Street. So, will there be a Santa Claus rally this year to save Christmas and Hanukkah from the Grinch? How High-Tech Nasdaq Stocks Do In Santa Rallies Most likely the dip in stocks and crypto over the last week was in part a simple matter of markets stopping to catch their breath. Both soared to record highs in the first half of the month. Dominic Pappalardo, chief multi-asset strategist at Morningstar Investment Management, says that these high valuations leave little room for error. He said , “Today’s extreme market reaction is being driven by today’s extremely rich valuations across risk assets.” Meanwhile, the Fed’s revised outlook expecting fewer cuts in the future after this most recent one in December may have dampened markets’ enthusiasm. “The move in equity markets can be attributed to the Fed’s updated outlook for fewer cuts in 2025,” Pappalardo said. There will probably be a Santa Claus rally this year. Historical data since 1950 shows that U.S. stocks have gotten this seasonal pick-me-up in 79% of the years. Historically, the average gain for stocks during this rally is around 1.3%. However, bear in mind that NASDAQ gains and losses are typically higher than those of the overall US stock market. Also, gains and losses for stocks since the pandemic have also exhibited a standard deviation higher than in most historical periods. How Cryptos Like Bitcoin Do on Holiday Pumps For cryptocurrency savers, investors, and day traders comparing high-tech stocks with Bitcoin and altcoins, it’s worth noting that historically, crypto also gets a Santa bump around the holidays. Moreover, the Santa Claus pump for crypto was often more pronounced than stock gains during this period. However, be forewarned that losses in altcoins can also outpace those of stocks when Krampus brings the coal to financial markets. Last year’s Santa rally saw a 4.87% rise in Bitcoin’s price, while the NASDAQ Composite increased by only 0.46%. The year before that, Bitcoin’s price fell by -0.61 while NASDAQ had notched a 0.04% gain. However, during the 2021 holidays, instead of a Santa rally, there was a Krampus slump. Bitcoin lost a markedly higher percentage than the NASDAQ. While tech stocks in this benchmark fell by -0.59%, Bitcoin capitulated by -6.8%. Bottom Line for Year-End Investors In 2024 Both tech stocks and cryptocurrencies like Bitcoin are enjoying a very robust rally that appears to many analysts poised to gain considerably more ground over the long term for these assets. During the last five days of December and the first two of January, there is usually a bump for stocks and cryptocurrencies. Whichever way markets go, Bitcoin usually goes further. The post Santa Claus Rally: Should I Buy High Tech Stocks pr Crypto? (Op-Ed) appeared first on CryptoPotato .

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