When the S&P 500 index shows a seasonal upward trend at year-end, Bitcoin follows a similar rhythm, with historical data providing a rare double bullish signal.
Author of the article, source: MarsBit
As December progresses, Wall Street's attention is gradually turning to the most anticipated seasonal phenomenon of the year—the 'Santa Claus rally.'
Since 1950, the S&P 500 index has had a probability of up to 79% of recording positive returns during the last five trading days of December and the first two trading days of January, with an average increase of 1.3%.
This seasonal pattern has been repeatedly validated over the past 75 years, making the last two weeks of December the best-performing weeks for the stock market.
On the other hand, Bitcoin quickly rebounded above $89,500 after dipping to $87,500 on December 15th, with a net inflow of $286 million for Bitcoin spot ETFs last week.
MicroStrategy co-founder Michael Saylor reiterated his determination to 'continue accumulating Bitcoin,' and the company will also continue to maintain its position in the Nasdaq-100 index.
Definition and historical performance of the Santa Claus rally
The 'Santa Claus rally' was first proposed by Yale Hirsch, founder of the Stock Trader's Almanac, in 1972, referring to the phenomenon of US stocks rising during the last five trading days of each year and the first two trading days of the following year.
This seasonal pattern enjoys a good reputation on Wall Street, not only because of its high win rate but also due to its predictive power for the following year's stock market.
Historical data shows that since 1950, the S&P 500 index has averaged a 1.3% increase during this seven-day window, with a probability of increase as high as 77%.
Among them, the S&P 500 index recorded a positive return rate of 78%, the Dow Jones was 79%, and the Nasdaq was 75%.
This seasonal trend is not a coincidence.
Multiple factors have contributed to this phenomenon: optimistic investor sentiment during the holiday period, increased holiday consumption, and lower year-end trading volumes make the market more susceptible to bullish retail investors. Notably, the Santa Claus rally has shown remarkable predictive ability for the following year's stock market trends. In the 29 years since 1994, the S&P 500 index rose 23 times during the Santa Claus rally, with 18 of those years seeing continued gains in US stocks the following year; conversely, in the six instances where the Santa Claus rally resulted in a decline, US stocks also fell the following year.
In other words, in the past 29 years, the Santa Claus rally has successfully predicted the direction of the US stock market the following year 24 times, with an accuracy close to 80%.
The strongest Santa Claus rally occurred during the 2008 global financial crisis. At that time, the S&P 500 index surged 7.4% in seven days, successfully predicting the market rebound in the following year.
In 2009, the S&P 500 index rebounded sharply after bottoming out on March 9, with an annual increase of 23% and a rise of up to 67% from the lowest point to the end of the year.
Bitcoin's December seasonal pattern
Similar to the US stock market, the Bitcoin market also exhibits a clear seasonal pattern, especially as December often becomes one of Bitcoin's strongest performing months in history.
Looking back at the data from 2015 to 2024, Bitcoin has closed December with a bullish candle in seven out of ten years, with an average monthly return of 4.3%.
This seasonal phenomenon is supported by multiple factors: holiday optimism boosts risk appetite, year-end bonuses flow into cryptocurrency investments, tax-loss harvesting creates buying opportunities, and institutional selling pressure decreases during the holidays.
Entering late December, retail traders gradually dominate trading volume, further reinforcing this trend.
Bitcoin's best December performances in history include a surge of 46% in 2017 and a rise of 36% in 2020, while the worst year, 2021, saw a decline of 19%.
This indicates that even in an overall bear market, December remains a relatively strong month for Bitcoin.
However, the situation in December 2025 is more complex. Bitcoin experienced a sharp correction in November, with prices falling from $116,000 to around $80,000.
On December 15th, Bitcoin briefly fell below $88,000, with a daily decline of 2.43%.
The Fear and Greed Index fell to 17, indicating 'extreme fear,' and has remained in fear territory for over 60 days, nearing the most panicked levels of the previous 2022 bear market.
If Bitcoin can reclaim the support range of $95,000 to $97,000, it will reshape the market structure. On the downside, if it can hold above $84,000, it can maintain an orderly correction and prevent further sell-offs.
The interconnectedness and future outlook of the US stock market and Bitcoin
Historically, there has been a subtle interrelationship between the US stock market and Bitcoin. When traditional financial markets face uncertainty, the cryptocurrency market often feels the impact.
In December 2025, both markets will face the key influencing factor of the Federal Reserve's monetary policy.
The Federal Reserve's interest rate policy has become the link between the US stock market and the cryptocurrency market.
Although the Federal Reserve's December FOMC meeting has already implemented interest rate cuts, Chairman Jerome Powell's stance on whether to continue cutting rates in January next year remains unclear.
According to CME's 'FedWatch' tool, the market's probability of a 25 basis point rate cut by the Federal Reserve in January next year has fallen to 24.4%.
This uncertainty in monetary policy has affected both markets.
Jeff Park, head of Bitwise Alpha Strategy, pointed out that the core reason Bitcoin has struggled to rise recently is that native holders continue to sell options, suppressing prices and implied volatility.
Although ETFs are buying spot and demand bullish options, the momentum is still insufficient to hedge against the selling pressure in the native market.
In the long run, both cryptocurrencies and gold will benefit from the monetization brought about by de-globalization and de-dollarization.
Cryptocurrencies have good privacy and anti-inflation properties, have grown rapidly since their inception, and are gradually being institutionalized. The potential regulatory relaxation of the Trump administration also provides potential benefits for the cryptocurrency market.
For the remaining trading days of 2025, the author is optimistic that the year-end rally will not be absent.
