The Santa Rally phenomenon, which is a beloved year-end tradition on Wall Street, has garnered significant attention from well-known analysts on Crypto Twitter in the Thai language of China.
And although this phenomenon may seem like a story in the Western market, many key opinion leaders in the Thai-speaking community of China place importance on the end-of-year trading day in 2025, considering it a significant signal for the direction in 2026.
The Santa Rally is not just a seasonal movement.
Phyrex, one of the most cited macro analysts in the Chinese crypto space, stated that the Santa Rally is not just an interesting statistical phenomenon but serves as a market risk indicator. If the market can still rise as expected from Christmas to New Year without additional macro stimuli, it indicates that investors are still willing to invest in risky assets, and this atmosphere will become the emotional foundation for next year's pricing.
However, the opposite side is also important. Phyrex warned that if Santa Rally failures occur frequently, it reflects that risk appetite has not yet recovered, and the market may face weakness or volatility until January or beyond.
This analyst also mentioned several mechanical factors that generally support the late-year market, such as tax-loss selling, which will end around mid-December, allowing capital to flow back into stocks. While institutional trading desks are mostly quiet during the holidays, trading volumes are light, and even small buying pressure can push indices up. Additionally, there is buying power from year-end bonuses and automatic contributions to 401(k) funds that help bolster buying pressure.
Michael Chao, a US-focused market analyst popular in the Chinese Twitter community, pointed out historical statistics that since 1950, the S&P 500 index has risen in 75% of the time during this Santa Rally period, with an average return of 1.55% per instance.
But the risks are still high.
However, not everyone is confident and celebrating early. Cryptojiejie stated that the global trading volume of Bitcoin and Ethereum has now fallen to the lowest point since 2025, considering this period as a 'garbage time' for traders. For this reason, she recommends that breakout traders take a break and enjoy the holidays until liquidity returns.
And the macroeconomic negative factors have also increased caution. Zhou Financial pointed out that the Bank of Japan's interest rate hike in December to 0.75% raised concerns about the cancellation of the yen carry trade strategy, while the Federal Reserve's 25 basis point rate cut, along with a hawkish stance and a dot plot signaling that there would only be two rate cuts in 2026, disappointed the market that hoped for more stimulus.
Phyrex summarized that if the market cannot create a rebound even during the seasonal period and liquidity starts to gradually return, it is a sign that the pressure from high interest rates on the economy is overshadowing the positive emotional effects of the festival factors.
2026 Preview
For Phyrex, the Santa Rally this year is particularly significant, as he views this situation as a preview of expectations for Q1 2026. The logic is clear: if investors refuse to push risky assets up, even with seasonal patterns, a vacuum of market sentiment, and liquidity returning in the same direction, it may indicate that something deeper is wrong.
The intense interest in foreign markets on Wall Street may partly reflect a lack of domestic options. Earlier this month, seven major financial industry associations in China issued a joint risk warning, which is considered the most comprehensive crypto crackdown since the ban in 2021 that forced all exchanges to exit China.
The statement clearly prohibits the tokenization of real-world assets (RWA) for the first time, including stablecoins, airdrops, and mining. With authorities blocking access to almost all markets, Chinese crypto investors have almost no choice but to observe the global market from the sidelines.
And while the Chinese crypto community on Twitter is closely following Wall Street like other countries, all eyes are on whether Santa will finally appear.
