Starting next week, we will enter the Christmas market. In the English-speaking regions, it is referred to as the 'Santa Claus Rally', which refers to the performance of the S&P 500 during the week after Christmas, specifically the last 5 trading days of the year and the first 2 trading days of the following year. From the results, in 79% of cases, the Christmas rally is upward, with the highest increase during this week being 7.4% and the highest decline being 4.2%. The average increase is around 1.3%.
From historical experience, the Christmas rally is not just a simple seasonal statistical phenomenon, but more like a barometer of market risk appetite. If the market can rise as expected after Christmas and around the New Year, it usually means that investors are still willing to allocate risk assets despite the lack of new macroeconomic stimulus. The risk appetite is confirmed at the end of the year, laying a foundational emotional basis for asset pricing in the new year. Conversely, it often indicates that the risk appetite has not been restored, making the market more prone to weakness or repeated fluctuations in January and beyond.
From the perspective of institutional and seasonal factors, on one hand, after the tax-loss harvesting completed in mid-December, funds are expected to flow back into the market. On the other hand, during the holiday period, the trading activity of institutions decreases, and trading volume shrinks, meaning that a small amount of buying can push the index upwards while lowering short-term volatility. Additionally, year-end bonuses and automatic deductions for pensions (such as 401k) may also provide buying support for the market.
Looking at the data for Bitcoin, the turnover rate finally decreased over the weekend, which also indicates that the trading volume of real users is indeed quite low. The high turnover rate during normal times is likely due to fluctuations from quantitative or high-frequency short-term investors. What is shown over the weekend should reflect the changes of real holders. However, next week we will start entering the Christmas market, and overall trading volume and turnover rate are expected to decline.
This Christmas market is basically the expectation for the first quarter of 2026. If under seasonal benefits, emotional vacuum, and gradually recovering liquidity, the market still fails to form an effective upward trend, it is likely to represent the current high-interest-rate environment's suppression of the economy, which has overshadowed the emotional boost brought by the holiday factor.
