What is a “Christmas rally?”
The Christmas rally, also known as the “Santa Claus Rally,” refers to a recurring pattern in which crypto markets tend to rise in the last weeks of December and early January.
Several factors are contributing to this trend, including improved investor sentiment during the festive season and year-end portfolio adjustments as traders and institutions reassess their holdings. Lower liquidity during the holidays can also amplify price movements, adding to the momentum of the rally. Around Christmas, crypto investors often behave differently than they do throughout the rest of the year.
While this pattern first appeared in traditional stock markets, its influence has since extended to gold and, more recently, to Bitcoin (BTC). Every year, as global markets slow down for the holidays, investors revisit the idea of a “Christmas rally.”
Both gold and bitcoin are viewed as stores of value, but they tend to behave differently when liquidity constraints or shifts in market sentiment. As December approaches, many investors debate which asset – gold or bitcoin – is more likely to benefit from the seasonal upswing.
What Does the Gold Classic Value Store Do?
For centuries, people have relied on gold to protect their wealth from inflation, which eroded the value of fiat currencies. Central banks around the world also hold significant gold reserves as part of their long-term reserve management and governance strategies.
Gold typically sees strong seasonal demand in the fourth quarter each year, driven by a number of factors:
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Jewelery purchases in China and India lead to festive seasons
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The accumulation of the Central Bank Reserve
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Institutional year-end risk management and portfolio adjustment.
Historically, gold does not experience sharp gains in December; Instead, it tends to increase gradually. In times of recessionary concern or geopolitical tension, gold often outperforms more volatile assets. While its price has responded to macroeconomic conditions, gold has rarely delivered the dramatic returns associated with cryptocurrencies.
do you know Gold requires vaults, insurance and safe transportation. Bitcoin, on the other hand, relies on Private key management, which can be as simple as using a hardware wallet. Both are current security challenges. Gold faces the risk of physical theft, while Bitcoin is vulnerable to cyberattacks.
What makes Bitcoin worth its value?
Bitcoin’s reputation as “digital gold” has grown significantly since November 2022, when it traded around $16,000. Since then, its price has risen steadily.
Bitcoin first surpassed the $100,000 mark on December 5, 2024, reaching $103,679. It has crossed this level several times, recording a peak valuation just above $125,000 in October 2025.
The capped supply of 21 million coins and decentralized structure make Bitcoin attractive as a hedge against financial inflation. However, unlike gold, it is generally viewed as a higher risk asset because it is completely intangible. Its price can advance quickly when sentiment is strong and fall sharply during periods of uncertainty.
Bitcoin has shown notable fourth-quarter performance trends over the years:
do you know Bitcoin trades 24/7, allowing investors to react immediately, even during the holiday season. This includes weekends when traditional markets remain closed.
What are the macro forces driving the Christmas rally?
The outcome of any Christmas rally depends largely on macroeconomic conditions. Key factors include Federal Reserve policy, inflation data and general market liquidity.
The US Federal Reserve cut the federal funds rate by 25 basis points (BPS) at its October 2025 meeting, setting a new target range of 3.75%-4.00%. The move was in line with market expectations and followed a similar rate cut in September, which brought borrowing costs to their lowest level since late 2022.
Lower interest rates tend to weaken the US dollar and may increase investor appetite for alternative assets such as Bitcoin.
The annual US inflation rate rose to 3.0% in September 2025, from 2.9% in August, according to official data. However, core inflation eased slightly to 3.0% from 3.1%.
Periods of elevated inflation often increase investor interest in alternative assets such as bitcoin and gold.
In terms of liquidity, Bitcoin tends to react more strongly than traditional assets. Even a relatively small amount of institutional flows, including Exchange-Traded Fund (ETF) Purchases can influence short-term price movements.
do you know The biggest buyers of gold include central banks, wealth funds and jewelers. The most enthusiastic adopters of Bitcoin are retail investors, tech entrepreneurs and younger generations who favor digital assets.
Case Studies: When bitcoin and gold perform
Historical market cycles highlight how Bitcoin and gold respond differently to changing economic conditions. These examples provide insight into when bitcoin tends to outperform gold and when gold acts as a more reliable safe haven.
Case Study: When Bitcoin shines
In 2020, governments introduced large-scale fiscal stimulus to counter the economic slowdown caused by the pandemic. Investors are turning to assets that can help preserve value as fiat currencies weaken. Gold rallied strongly early in the year, while Bitcoin gained momentum in the second half.
By December 2020, Bitcoin closed near record highs around $29,000, while gold ended the year with modest gains near $1,900. This case study illustrates that in times of abundant liquidity and low interest rates, Bitcoin has historically shown stronger performance than traditional stores of value such as gold.
Case Study: When gold is ruled
Between 2021 and 2022, inflation will advance, prompting central banks to respond with sharp interest rate increases. Risk assets are wide, and Bitcoin, which is more speculative, has suffered a steep decline.
Gold, however, remained resilient, with periods of price gains as investors turned to it as a traditional safe haven. This case study illustrates that gold tends to retain value better than Bitcoin during periods of financial crisis and market stress.
