Xmas Crypto Price Prediction - Santa Claus Rally? Tax Loss Harvesting Dump?
Traders often predict these two catalysts will drive crypto prices up or down in December - a 'Santa Claus rally' and tax loss harvesting.
The two terms are older than cryptocurrency, commonly discussed by stock traders at the end of each financial year. Just how accurate are they for making stocks or crypto price predictions?
One of the most popular crypto Twitter accounts, @Pentosh1 posted to his 657,000 followers to expect those two 'narratives' in December.
He added Wall Street bonuses, as did many in the replies, and Chinese New Year as a 2023 narrative for crypto prices. Many holders around since the 2018 bear market will recall these ideas.
While he didn't expand on that tweet thread yet this November, Pentoshi has been critical of this type of fundamental analysis in previous years, saying 'just trade the charts' and 'what matters is the trend'.
Last Christmas for example, Pentoshi tweeted the image below and his comments that bad traders rely on narratives:
Data on Santa Claus rally:
Fact: It's pure cope from bad traders + underwater bag holders
Where is the magical institutional bid and volume that was coming this week? After they risked off for EOY but would risk on to front run? It's you vs the charts. Narratives = scam.
Investopedia explains the justification for a Santa Claus rally as a 'general feeling of optimism and seasonal happiness on Wall Street, and the investing of holiday bonuses'.
The theory dates back to Yale Hirsch's Stock Trader's Almanac written in 1972.
Tax loss harvesting is defined as selling assets to 'limit the amount of taxes due on short-term capital gains, which are generally taxed at a higher rate than long-term capital gains'.
Last December Pentoshi noted one narrative was that institutions
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