In the face of the historical market fluctuations that have repeatedly occurred and seem to be repeating around Christmas in 2025, as an analyst, I believe that rather than blindly guessing short-term ups and downs, it is better to distill a few pragmatic suggestions for investors. Based on a deep understanding of seasonal patterns and an assessment of the current market situation, I propose the following three core suggestions, hoping to help everyone respond more rationally to this special period.
Suggestion 1: Correctly understand the status and role of seasonal patterns - they are background noise, not a conductor.
The data clearly tells us that, in the long run, holding the average return for the entire month of December (historical average over 9%) is far higher than merely speculating on the short week around Christmas (average about 1.3%). The implication here is that attempting to time the Christmas market precisely is a risky operation with a poor risk-reward ratio. Seasonal patterns should be regarded as one of the background information for understanding the market environment, used to explain why current market liquidity is decreasing and why volatility may increase, but they should never become the sole basis for making significant directional bets. The more important driving factors will always be macro trends, liquidity issues, and specific catalysts. My personal habit is to include seasonal factors in my checklist, but their decision-making weight will not exceed 10%.
Suggestion two: In the special market during the holidays, prioritize managing liquidity risk rather than chasing returns.
During the Christmas holiday, the most significant feature is the sharp depletion of liquidity. Major traders in Europe and America withdraw, market makers narrow the quoting scale, and market depth worsens. In this 'shallow water' environment, any slightly larger buy or sell order may trigger severe 'twitches' in prices, known as 'flash crashes' or 'short squeezes.' Therefore, the primary principle for trading during this period is defense and survival. Specifically:
Reduce leverage, or even deleverage: In times of insufficient liquidity, high leverage can be fatal. Slight price reversals can trigger forced liquidation.
Avoid placing orders in areas far from the current price: Thin liquidity may lead to orders not being executed at ideal prices, with slippage potentially exceeding expectations.
Consider temporarily stepping back and observing: For most investors, being in cash during the holidays and enjoying the break may be the lowest cost and most stable mindset choice. As a market adage goes: 'Sometimes, the best trade is to make no trade at all.'
Suggestion three: Use the calm period in the market to plan for the future, rather than getting caught up in current fluctuations.
The market holiday can just be a 'learning period' and 'planning period' for investors. When market trading is light and price fluctuations are mostly noise, it is a good time for us to calm down and conduct in-depth research. I suggest using this time to:
Review annual trading: Check this year's portfolio performance, analyze successful and failed trades, and summarize lessons learned.
Research industry trends and project fundamentals: Pay attention to sectors that may explode next year, such as Layer2, DeFi, AI + blockchain, and filter out truly promising projects.
Develop a New Year investment plan: Based on changes in the macro environment and personal risk tolerance, plan the asset allocation ratios and investment strategies for 2026.
My personal view is that for the Christmas cycle, we should maintain a 'strategically disdainful, tactically respectful' attitude. Strategically disdainful means not believing there is a guaranteed 'Christmas market' and adhering to the core of long-term value investing. Tactically respectful means fully respecting the peculiarities of the holiday market at the operational level, strictly managing risks, and avoiding unnecessary losses. Currently (before Christmas 2025), against the backdrop of a bearish technical outlook, macro uncertainties (such as expectations of sustained high interest rates), and a sluggish market sentiment, my inclination is more cautious. I would choose to hold light or no positions during the holidays and focus my main efforts on preparing for the new cycle that may come next year.
Investing is a marathon, not a sprint. Wise retreat and patient waiting are often for the next stronger and more robust offensive. I hope these suggestions can help investors safely navigate each market cycle and ultimately achieve stable long-term returns.
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