Here's What History Says to Expect for Bitcoin in December

BTC-USD +0.80%

Key Points

• Bitcoin isn't doing well lately.

• It could get worse in December.

• This has the makings of a juicy opportunity to buy the coin while it's cheaper.

• 10 stocks we like better than Bitcoin ›

Bitcoin (CRYPTO: BTC) is slightly negative for the year, falling by around 5% despite making new all-time highs in early October. With what's shaping up to be a pretty rough November, the question of what usually happens to the big orange coin in December is likely at the front of many investors' minds.

So without further ado, here's what to expect next month.

This might not be the Santa rally that many are imagining

Seasonality data can reveal where investors have historically been rewarded for being optimistic versus cautious. For Bitcoin, the data show that December is, on average, a coin toss that's leaning slightly against you.

Looking at the coin's monthly returns since 2013, December's average gain is modest, around 4.8%. Big outlier years, such as 2016, 2017, and 2020, all of which saw gains in excess of 25%, significantly contribute to pulling the average up. In other words, a couple of blockbuster Decembers mask the fact that most have been lackluster or slightly negative; the median performance for the month is a decline of 3.2%. Through 2024, December has finished with Bitcoin higher only five times out of the last 12 years, meaning it has been in the red seven times.

The more worrying historical pattern that pertains to this year is what happens when November and October were also negative. In every year since 2013, when November closed in the red, December did too. And in 2018, the sole prior instance of October and November both seeing declines, December was another down month. So if November continues to see Bitcoin's price decline -- it's down by 21% in the last 30 days -- the seasonality data indicate that December will probably be another disappointment rather than a joyous Santa rally.

This is not a guarantee of any kind that December 2025 will see Bitcoin lose value. The seasonality sample size is fairly small, and Bitcoin is perfectly capable of ignoring its own history, especially considering that the asset is currently enjoying its highest-ever degree of integration with the traditional financial system as well as unprecedented usage by financial institutions. But if you are assigning probabilities about near-term performance rather than telling yourself comforting stories, the seasonal record argues for a lot of caution about expecting a clean year-end rally.

Weak winter months can be an ally for investors

When the near-term data lean bearish, investors often have the instinct to look away and wait for conditions to improve. That instinct is understandable, and it might be a good idea if the market's sky is actively falling, like during the crypto sector's flash crash on October 10. But with Bitcoin, it's often a bit backward.

The investment thesis for Bitcoin doesn't depend on whether December or any other month is historically strong for its price performance. It depends on the combination of a finite supply, growing adoption by institutions and governments as a store of value, and its emerging role as a scarce macro asset that is increasingly distinct from traditional risk assets, all of which require many quarters to play out and impact the coin's price. Therefore, if you expect some price weakness coming up, the right move is to prepare some additional capital to buy the dip with, as in the long run prices are likely to be higher than they are today as a result of the coin's restrictive supply dynamics as mediated by its halving schedule.

One good idea is to treat seasonally weak stretches as opportunities to accumulate, which is what I'll be doing. Assuming that you believe Bitcoin will remain relevant over the next decade, adding gradually when sentiment is sour and recent performance is negative is usually a better deal than piling in when headlines trumpet new all-time highs, and it's almost always a better deal than panic selling or waiting on the sidelines when times are turbulent.

Of course, there are real risks here. If macro conditions deteriorate sharply, and they might, a red November followed by a red December could be the front edge of a deeper downturn rather than a garden-variety seasonal pullback. Investors should not dismiss this possibility, as it could imply a wait of several years for any new Bitcoin purchases to recover their value and be held at a profit.

In practice, the way to respect those risks is to be deliberate about how you get exposure. That means setting a modest target allocation to Bitcoin within a diversified portfolio, then dollar-cost averaging into that allocation over time, rather than making a single large purchase. If December ends up being another negative month on the back of an already weak November, that approach naturally causes you to buy more when prices are lower.

With Bitcoin, if you are willing to think in terms of years rather than holiday rallies, a gloomy winter can give way to a bountiful harvest in the future. So, plan ahead and prepare to hold your coins for a long while, as it may be necessary.

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Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

Here's What History Says to Expect for Bitcoin in December was originally published by The Motley Fool