The Santa Rally is a tradition anticipated at year-end on Wall Street and is generating significant interest among analysts who have the most followers on Chinese cryptocurrency Twitter.
Key influencers in the Chinese-speaking world do not regard this as a mere legend of the Western market. They see the last trading day of 2025 as an important signal for forecasting market trends in 2026.
Santa Rally, more than just a seasonal effect.
Phyrex, the most frequently mentioned macro analyst in the Chinese cryptocurrency market, states that the Santa Rally is not just a statistical phenomenon. 'This phenomenon is closer to an indicator of market risk appetite. If the market succeeds in rising without any special macro factors from Christmas to New Year's, it proves that investors still have the willingness to invest in risk assets. This lays an emotional foundation for asset price formation next year.' – Phyrex, Macro Analyst
The opposite case is also noteworthy. Phyrex warns that if the rally fails, it will signal that the preference for risk assets has not revived, and the market could remain exposed to bearishness or volatility until January.
This analyst mentions several mechanical factors supporting the year-end rally. By mid-December, tax-loss harvesting will be completed, leading to a flow of funds back into stocks. As institutional desks quiet down for year-end holidays, trading volume thins, allowing even a small buying force to drive index increases. Year-end bonuses and automatic 401(k) deposits also strengthen passive buying pressure.
Michael Chao is a US market expert gaining popularity on Chinese cryptocurrency Twitter. He stated that since 1950, there has been a 75% probability of the S&P 500 rising during the Santa Rally period, with an average return of 1.55%.
Risks remain significant.
Not everyone is celebrating prematurely. CryptoJeje pointed out that the global trading volume of Bitcoin and Ethereum has shrunk to a low in 2025. She advised that now is a 'trash time' for traders and recommended investors pursuing breakthrough strategies to take a break until liquidity returns.
Macroeconomic headwinds are also factors that heighten caution. Zhou Financial mentioned that the Bank of Japan raised the benchmark interest rate to 0.75% in December, increasing concerns about unwinding yen carry trades. The Federal Reserve has adopted a hawkish stance, reducing rates by 25bps, but only two cuts are projected until 2026. The market was expecting more accommodative policies, but was disappointed.
Phyrex clearly explains this tension. 'Despite seasonal tailwinds and gradual liquidity recovery, if an effective rally is still not formed, it indicates that the burden of a high-interest-rate environment is already surpassing the psychological boost from the holiday effect.' – Phyrex, Macro Analyst
2026 Preview
For Phyrex, this year's Santa Rally holds special meaning. He evaluates this as essentially a precursor to the expectations for Q1 2026. The logic is clear: if risk assets do not rise despite seasonal patterns, psychological vacuum, and returning liquidity all being in favor of investors, there may be more fundamental issues.
Intense focus on Wall Street also reflects a lack of options. Earlier this month, China's seven major financial associations jointly issued a risk warning. This is the strongest cryptocurrency regulation measure since all exchanges withdrew in 2021.
This statement clearly bans the tokenization of real-world assets (RWA) for the first time, along with stablecoins, airdrops, and mining. As regulators effectively block all entry points, Chinese cryptocurrency investors have no choice but to observe the global market.
Users of Chinese cryptocurrency Twitter are paying closer attention to Wall Street than anyone else. Everyone is watching to see if Santa will make an appearance.
