Bitcoin’s aggressive $100K rise will bring out the ‘Holiday Effect’

Bitcoin’s recent $100k milestone has many speculating about the timing. While Q4 is generally a bullish quarter, the surge in Bitcoin’s price reportedly came on the back of increased institutional demand and strong buying activity from the US.

Buying pressure coincides with the holiday season, which may enhance market euphoria due to the “Holiday Effect.” Will the phenomenon intensify BTC price before 2024 ends?

Bitcoin could hit another record high before year-end

Bitcoin price surpassed $100k on December 4 for the first time, leading to celebrations within the crypto community. Bitcoin maintained the range before dropping under the crucial level on December 5. According to CryptoQuant data, the rise was on the back of 2 things: institutional demand and sustained buying by US investors.

Bitcoin passes $100k as institutional demand drives the market.

The Coinbase Premium Index highlights sustained buying pressure from U.S. investors. pic.twitter.com/eZvKFCmVxs

— CryptoQuant.com (@cryptoquant_com) December 5, 2024

At the time of writing, CoinGecko notes Bitcoin’s 24-hour range between $92,900 and $103,600. However, there is one reason to be optimistic that BTC will break the upper band due to the ‘Holiday Effect.’

Research has shown that returns are generally higher around the holidays and this phenomenon is called the Holiday Effect. Bitcoin’s $100k peak comes squished between the Thanksgiving and Christmas holidays. Papers cite that investor buying is because of “holiday euphoria” during this period. But, it is also likely that not all investors would participate in the market during this time. Considering it is also a festive time to spend with families or on vacations. Therefore, despite uncertainty about the trading volumes, stocks have seen the Holiday Effect. This also means, that if Bitcoin follows a similar trajectory, another record peak could be achieved before 2024 concludes.

Bitcoin demand is a positive indicator

What is noteworthy is that retail demand for Bitcoin is already on the rise since 2020.

CryptoQuant research finds that the 30-day demand change from retail investors is currently at a record high. The reason is simple—retail investments could be backed by institutional trust. And the latter could be playing a role in the former.

Bitcoin 30-day retail demand | Source: CryptoQuant

The research shows that there is high demand even as long-term holders are selling to take profits. The report says, “Historically, increased retail participation has often signaled a potential local top.”

This essentially means that when a lot of everyday investors jump in, it can signal that Bitcoin’s price is nearing a short-term peak. However, this surge also shows more people are getting involved, which can boost overall market activity, the research suggests.

The research underlined 2 potential scenarios. One where Bitcoin price moves sideways, as retail enthusiasm cools off. Second was if Bitcoin breaks the $100,000 mark. And since it did, the prediction is of another wave of excitement, potentially leading to a “euphoric” market phase where prices climb quickly.

The key is to watch how retail and institutional investors interact as it is about long-term adoption. Avinash Shekhar, co-founder and CEO of Pi42, told Cryptopolitan, “It [$100k milestone] comes in a year that has seen Bitcoin more than double, including a 45-percent advance in less than four weeks following Trump’s presidential victory.”

Shekhar also reminds us that it has been 16 years since Bitcoin’s creation and signals “mainstream adoption.” Sumit Gupta, co-founder of crypto exchange CoinDCX, believes that the $100k mark is not a number but a “psychological breakthrough.”

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