Santa Claus rally in equities lifts spirits for battered Bitcoin investors

As the year draws to a close, a well-known Wall Street seasonal trend could offer relief to Bitcoin bulls.

Bitcoin (BTC $87,972.47) has endured its toughest fourth quarter since 2022, but the Santa Claus rally — a historical uptick in the S&P 500 during the last five trading days of December and the first two of January — could improve sentiment for BTC and the broader crypto market.

Since 2005, the S&P 500 has risen 15 times during this period and fallen only five, averaging 0.58% gains, according to The Market Stats. Extending the data to the 1950s, the index has gained 77% of the time during Santa periods and has never posted three consecutive losses. Although the S&P 500 dipped in the past two Santa periods, historical trends suggest a year-end rally is likely.

The growing link between equities and bitcoin — fueled by institutional adoption via ETFs — means that a seasonal stock surge could spill over into crypto. BTC’s own Santa Claus record is mixed: gains of 33% in 2011 and 46% in 2016 contrast with declines of 14% in 2014 and 10% in 2021, averaging 7.9% returns since 2011.

Gold outshines

Gold has consistently led Santa periods, delivering a cumulative 95% return since 2005, with only 2023 posting a minor negative. The precious metal recently hit all-time highs above $4,400 an ounce, hinting at a strong holiday season.

Overall, while gold trades at record highs and the S&P 500 sits just 1.5% below its peak, bitcoin remains roughly 30% below its all-time high, leaving room for potential upside if equities and gold maintain seasonal strength.