This year's Christmas rally may come early.

Written by: Ashrith Rao

Translated by: Chopper, Foresight News

The so-called "Christmas rally" refers to the phenomenon in the cryptocurrency market where prices typically surge in the last few weeks of December and into early January of the following year. This trend is driven by multiple factors, including annual fund reallocation triggered by institutions and traders adjusting their portfolios, as well as a seasonal boost in investor confidence.

During the holiday period, decreased market liquidity may amplify price volatility, further propelling the rebound momentum. There are significant differences in market behavior for crypto assets throughout the year compared to the Christmas period. This trend originated in traditional stock markets but has begun to reflect in the gold market and recently in the Bitcoin market.

Whenever global markets slow down due to holidays, market participants reassess the possibility of a Christmas rally. In times of low liquidity or shifts in market sentiment, the reactions of gold and Bitcoin can differ significantly.

Now investors are starting to discuss: which asset, gold or Bitcoin, will benefit more from the anticipated seasonal rise in December?

For generations, people have been buying gold to protect their wealth from inflation. Central banks around the world have also incorporated large amounts of gold into their reserves as an important component of foreign exchange reserve management and monetary policy.

At the end of each year, the seasonal demand for gold often rises, typically driven by various factors:

• Jewelry purchases usually increase during the festival and wedding seasons in India and China;

• Central banks continue to adjust their reserve structures, leaning towards increasing gold holdings;

• Institutions engage in year-end risk management and portfolio adjustments.

Gold's Holiday Performance

December is usually not a month for gold prices to soar but rather shows a gradual upward trend. During economic downturns or geopolitical turmoil, gold often exhibits more safe-haven properties than other assets.

Although gold prices fluctuate with the overall economy, they rarely deliver the astonishing returns seen in cryptocurrencies.

Even so, this year gold prices have surged, repeatedly hitting historical highs, peaking at $4,380 per ounce, with subsequent corrections being unprecedented.

In recent weeks, gold has rebounded from a significant drop, currently trading above $4,100 per ounce, showing strong performance. In this highly active trading market, long positions have seen substantial profits.

With the end of the U.S. government shutdown and the national debt expected to reach a historic high of $40 trillion, this precious metal has rebounded from a deep decline.

Currently, gold prices are just 7% away from their historical highs, and investors are well aware that after the government shutdown ends, deficit spending will only increase further.

Bitcoin: A New Choice for Value Storage

Since Bitcoin's price reached around $16,000 in November 2022, the view that "Bitcoin is digital gold" has gained widespread acceptance, and its price has continued to rise.

On December 5, 2024, Bitcoin first broke the $100,000 mark and has since reached that level multiple times. During the peak period in October this year, Bitcoin's price surpassed $125,000, but similar to gold, it subsequently experienced a significant correction.

Even so, Bitcoin has largely maintained the critical psychological level of $100,000, with only a few brief dips below it.

Bitcoin's decentralized structure and fixed supply of 21 million coins make it a potential choice for resisting currency inflation.

However, overall, Bitcoin is viewed as a riskier investment compared to gold: when investor confidence is high, its price can skyrocket; when confidence wanes, it can also plummet.

Historically, Bitcoin's performance in the fourth quarter of each year tends to be noteworthy.

Data Source: TradingView

Macroeconomic Factors as This Year's Core Driving Force

This year, the economic situation has become the most critical factor determining whether the Christmas rebound will arrive as expected.

Market liquidity, price stability indicators, and central bank policies (especially the Federal Reserve's policies) are all core influencing factors.

At the Federal Reserve's meeting in October 2025, the central bank lowered the federal funds rate by 25 basis points, setting a new target range of 3.75%-4.00%. This rate cut was in line with market expectations and was another action following the September rate cut, bringing borrowing costs to their lowest level since the end of 2022.

A decrease in interest rates typically leads to a depreciation of the dollar, which may increase investor interest in alternative assets like Bitcoin.

Reports indicate that the official inflation rate in the U.S. was 3.0% in September 2025, up from 2.9% in August; however, the core inflation rate slightly decreased from 3.1% to 3.0%. During periods of high inflation, market attention towards alternative assets like Bitcoin and safe-haven assets like gold tends to rise significantly.

Unlike traditional assets, Bitcoin's liquidity exhibits higher volatility.

Institutional buying of Bitcoin exchange-traded funds (ETFs) and small fund inflows can significantly impact short-term price fluctuations.

The core difference between the two asset classes lies in their buyer demographics: gold's main purchasers are jewelers, sovereign wealth funds, and central banks; while Bitcoin's core supporters are young digital currency enthusiasts, tech pioneers, and retail investors.

Comparison of Past Performance of Gold and Bitcoin

In recent years, both asset classes have risen in tandem during multiple rallies, with this trend being particularly evident in 2025. However, there have also been many instances where "one asset rallies before the other begins its upward cycle."

In 2020, in response to the economic recession triggered by the pandemic, governments around the world launched large-scale stimulus plans. As fiat currencies depreciated, investors seeking asset preservation flocked to assets with stability promises.

At the beginning of that year, gold prices surged; in the second half, Bitcoin's momentum rose. By December 2020, gold closed at $1,900, a slight increase; while Bitcoin approached its peak, closing around $29,000.

This case illustrates that during periods of ample market liquidity and low interest rates, Bitcoin's performance typically outshines traditional assets like gold.

From 2021 to 2022, inflation soared, and central banks raised interest rates significantly in response.

During this market crash, speculative risk assets like Bitcoin were severely impacted. Market participants turned to gold, a traditional safe-haven asset, which experienced multiple rounds of price increases, demonstrating strong resilience.

This indicates that during periods of monetary tightening and market pressure, gold's preservation ability typically surpasses that of Bitcoin.

With the government shutdown causing data freezes, the Washington fiscal deadlock has now ended, and the release of inflation data will largely determine which of the two asset classes can win the Christmas rally.

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