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The holiday season often sees a spike in activity across financial markets, including cryptocurrencies. This phenomenon, popularly known as the “Christmas Rally” or “Santa Claus Rally”, has historically seen crypto markets rally from late December to early January. This seasonal trend is caused by a combination of investor sentiment, portfolio adjustments, and liquidity fluctuations. As Bitcoin, Ethereum, and other digital assets continue to mature as stores of value, understanding these patterns can provide valuable insight into how cryptocurrency markets will behave during this period.
- The Christmas rally is a recurring pattern, with crypto markets tending to rise from late December to early January.
- Investor behavior, year-end portfolio rebalancing, and reduced holiday liquidity drive this seasonal rally.
- Bitcoin increasingly acts as a digital store of value and competes with gold in seasonal uptrends.
- Macroeconomic factors such as Federal Reserve policy and inflation will influence the strength of the rally.
- Historical performance shows that Bitcoin outperforms gold during periods of liquidity and low interest rates, but becomes more volatile during times of market stress.
What is “Christmas Rally”?
The Christmas Rally, also known as the “Santa Claus Rally,” describes a trend of growth in the cryptocurrency market during the holiday season, which typically occurs from late December to early January.
Several factors contribute to this pattern, including increased investor optimism during the festive period and strategic portfolio rebalancing at the end of the year. During the holidays, market liquidity is reduced, which amplifies price fluctuations and may further accelerate price increases. This seasonal phenomenon was initially observed in traditional stocks, but has become more pronounced in the cryptocurrency space, especially Bitcoin (BTC).
Both gold and Bitcoin are widely considered stores of value. However, their behavior during times of illiquidity or changes in market sentiment may be different. As global markets wind down this year, investors are debating whether gold or bitcoin can benefit more from seasonal uptrends.
Why is gold a classic store of value?
Gold has long been a favored hedge against inflation and currency depreciation, and has been preserved for centuries as a symbol of wealth protection. Central banks around the world maintain large reserves, reflecting gold’s role in macroeconomic stability.
Seasonally, gold demand is expected to increase in the fourth quarter due to:
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Jewelry purchases across China and India ahead of holidays
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Acquisition of central bank reserves
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Year-end risk management and portfolio rebalancing by financial institutions
Gold traditionally appreciates gradually rather than rapidly, but it performs well during times of geopolitical uncertainty and economic slowdown. Even if it doesn’t offer dramatic returns compared to cryptocurrencies, its security is still attractive.
Did you know? Gold requires physical storage, insurance, and safe transportation, which poses security risks. Conversely, Bitcoin relies on private key management to be as simple as hardware wallets, but both assets face security challenges. Money comes from theft, Bitcoin from cyber attacks.
What makes Bitcoin a digital store of value?
Bitcoin’s reputation as “digital gold” has been solidified since November 2022, when the price hovered around $16,000, and has been on a steady upward trajectory since then.
On December 5, 2024, Bitcoin crossed the $100,000 threshold, reaching approximately $103,679, and peaked at just over $125,000 in October 2025. A fixed supply cap of 21 million coins combined with diversification makes it an attractive inflation hedge. However, due to Bitcoin’s high volatility, it is riskier than gold, and price fluctuations are often driven by market sentiment.
Historically, Bitcoin has benefited from monetary easing and periods of low interest rates, resulting in outstanding performance in the fourth quarter.
Did you know? Bitcoin’s 24/7 trading cycle allows investors to react instantly, even during holiday weekends when traditional markets are closed.
What are the macroeconomic forces behind the Christmas rally?
The strength and frequency of the Christmas rally in the cryptocurrency market is mainly determined by external economic conditions. Key influences include Federal Reserve policy, inflation rates, and market liquidity.
The Fed’s decision to lower the federal funds rate to a range of 3.75% to 4.00% in October 2025 (the third consecutive rate cut) reflects its accommodative monetary stance. Lower interest rates typically cause the dollar to weaken, increasing demand for alternative assets such as Bitcoin.
Meanwhile, the inflation rate rose moderately to 3.0% in September 2025, further increasing interest in hedging assets. Within this macroeconomic background, small changes in the inflow of funds to institutional investors, including ETF investments, can cause short-term price fluctuations.
Did you know? Gold is primarily purchased by central banks, sovereign wealth funds, and jewelers, while retail investors, tech entrepreneurs, and the younger generation prefer digital assets like Bitcoin.
Case Study: When Bitcoin and Gold Performed
Historical cycles highlight the different conditions under which Bitcoin or gold outperform each other and provide insight into market strategies during economic fluctuations.
Case Study: When Bitcoin Shines
In 2020, global financial stimulus aimed at combating the economic slowdown caused by the pandemic fueled Bitcoin’s rally in late 2020, with the price approaching $29,000 by the end of the year. On the other hand, gold rebounded early but failed to reach the same heights. This shows the strength of Bitcoin in times of abundant liquidity and low interest rates.
Case study: When money ruled
In 2021-2022, rising inflation prompted aggressive interest rate hikes by central banks. While Bitcoin experienced a sharp decline reflecting its speculative nature, gold proved more resilient. This period highlights gold’s role as a safe haven during times of monetary tightening and economic uncertainty.
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