Is Bitcoin (BTC) Out of Year-End Stock Market Rally?

The stock market year 2022, which investors already want to forget, is coming to an end. Indeed, it is the worst year for the stock market since 2008, with stocks, bonds and cryptocurrencies all falling together. On the other hand, is there a small hope of a rally at the end of the year to restore the balm of the heart? ?

The year-end rally, an understanding between myth and statistical reality

The end of the year festivities are just around the corner, the spirits are rejoicing and The pair volatility/trading volume is starting to decrease significantly in the stock market. For investors and traders in financial markets, this period provides a starting point for a retrospective, review of the past year to better project the key trends of the coming year.

In a few words, what should be remembered in the financial markets from this year 2022? It’s one of the worst years since the 2008 financial crisis, with stocks, bonds and cryptocurrencies all down, double-digit declines for all three asset classes.

The bear market of 2022 is above all else vertical rise in interest ratesa tool used by Central Banks to reduce public enemy number one, i.e. inflation. This drastic tightening of funding and liquidity conditions led to the worst bond crash since the 2008 financial crisis, as well as an average 25% decline in stock market shares (based on major Western stock market indices).

For the cryptocurrency market, the record is even saltier, with the price of bitcoin down 65% this year. and triangulation of institutional participation by asset size in large ETF-type funds under management (aum).

Long punished by cross-active correlation factors (especially the appreciation of the US dollar in Forex, the floating currency market), the cryptocurrency market has been suffering since November. endogenous crisis of trust against centralized platforms.

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To end the year, the stock market can breathe a little with a clear technical bounce in the CAC 40 and S&P500 indices since Wednesday’s trading session. Thus, the CAC 40 price respects its seasonality and it gives a positive average performance at the end of December, a statistical fact often referred to as the Christmas rally. On the other hand, this statistical fact does not apply to the cryptocurrency market.

Chart showing the average performance of the CAC 40 for each trading week in December since 1987 (source, Vincent Ganne)

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Bitcoin, 2022 to forget, the worst in the last 10 years in the stock market

Back to the bitcoin price we saw above, which is down 65% this year and more than 74% from its old all-time high (last set on Monday, November 8, 2021).

This year 2022 will definitely be forgotten for Bitcoin as it is the worst year in 10 years by some measures. I again referred to the seasonality data (the average of the stock market over a period of time) and here is a clear conclusion: 2022 is the first year in 10 years with 4 consecutive negative quarters for BTC.

So here is my conclusion: Can’t wait for 2023! I am confident that this new year will be the year of the revival of the long-term bull market. Until then, Merry Christmas to you all.

Chart showing the average quarterly performance of bitcoin prices since 2013 (source, Coinglass)

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