"Santa Rally" incoming? Look out for these key events
ICYMI, December 2025 has already kicked off with a bang, at least for Bitcoin!
To recap:
- Dec 1: Bitcoin tumbled as much as 8.2% to briefly dip below $84k. This past Monday saw Bitcoin's 11th biggest 1-day intraday move in nominal USD terms so far this year.
- Dec 2-4: The world's biggest crypto subsequently staged a stunning rebound to reach a 2-week high, now testing the psychologically-important $94k resistance level at the time of writing.
However, looking major TradFi assets, it's been a relatively calm start to the month so far:
- The SP500 (Bybit's instrument which tracks the benchmark S&P 500 index) is easing slightly lower, though holding just around 1% below its all-time intraday high of 6928.63 posted on Oct 30.
- Gold (XAUUSD+ on Bybit) has dipped below the psychologically-important $4200 level, finding support at its 9-day simple moving average (SMA).
- EURUSD (Bybit: EURUSD+), which is the world's most-traded FX pair, is holding around a 6-week high, after having hit the 1.16770 target yesterday (Wed, Dec 3).
The 1.16770 mark was our upside target for EURUSD+, cited during last Friday's (Nov 28) "Week Ahead Preview" livestream with Bybit Learn's Chief Market Analyst, Han Tan.
Trade SP500, XAUUSD+, EURUSD+, and more on Bybit MT5 here.
December Cheer
Still, the final month of the calendar year does seasonally produce gains for major asset classes.
Over the past 10 Decembers (since 2015):
- Bitcoin has averaged a monthly gain of 11.13%
December has historically produced Bitcoin's 3rd biggest monthly average climb of the calendar year (Oct: 22.5% average; Feb: 15.2% average)
- Gold has averaged a monthly gain of 2.2%
December has historically produced Gold's 2nd biggest monthly average climb of the calendar year (January: 3% average)
- EURUSD has averaged a monthly gain of 1.09% - its biggest monthly average climb of the calendar year!
However, the term "Santa Rally" is often associated with a phenomenon seen in US stock markets this time of year.
What is a "Santa Rally"?
This year-end period, specifically starting from the final week of December through to the first 2 trading days of the new year, often coincides with gains in US stock markets.
Since 1950, the S&P 500 has climbed 79% of the time during this 7-day period.
To be certain, for the entirety of December, the S&P 500 has averaged a slight monthly DECLINE of 0.1% over the past 10 years.
Hence, while US equities tend to enjoy some year-end cheer, stock market bulls (those hoping prices will go higher) may have to wait a couple more weeks before officially entering the "Santa Rally" period.
NOTE: The S&P 500 index is the benchmark for measuring the overall performance of US stock markets. This benchmark stock index comprises 500 industry leading names, including Nvidia, Tesla, Apple, JPMorgan, Walt Disney, Johnson and Johnson, Exxon Mobil, Netflix, Mastercard, and so many more.
Will there be a "Santa Rally" in 2025?
Much will have to do with how these major macro events unfold - events we also highlighted in yesterday's Daily Bits article:
- Dec 10: Fed rate decision (91% chance of a rate cut)
- Dec 16: US November jobs report
- Dec 18: US CPI (consumer price index a.k.a. inflation) report
These events come amidst broader concerns about AI spending, geopolitical risks, credit markets, and potential bond yield volatility across major economies such as the US, UK, and Japan.
Overall, should the Fed be allowed to lower US interest rates further in 2026, while US inflation and other macro downside risks be kept at bay, that should bode well for year-end gains for risk-on assets including stocks and crypto.