"Santa Claus Rally": Bitcoin vs. Gold

In what is known as the Christmas rally, or the “Santa Claus rally,” the cryptocurrency markets generally see a spike in the final weeks of December and the first few days of January.

There are a number of factors that contribute to this pattern, including the yearly reallocation of portfolios as institutions and traders adjust their investments and the seasonal boost to investor confidence.

The holiday season’s reduced liquidity can amplify price movements, adding to the rally’s momentum.

There is a noticeable difference in the actions people take in the digital assets market throughout the year versus over Christmas.

Although this movement started in traditional stock markets, it has already begun to reflect in gold and, more recently, Bitcoin.

Stakeholders reevaluate the idea of a “Christmas rally” every year as global markets slow down for the holiday season.

The responses of gold and bitcoin during times of low liquidity or shifts in market sentiment can differ considerably.

Investors are starting to talk about which asset would benefit more from the expected seasonal rally in December: gold or Bitcoin.

To protect their wealth from inflation, which eats away at the value of money on paper, people have been buying gold for generations.

As an integral part of their long-term strategy for managing reserves and monetary policy, global central banks also keep sizable gold holdings.

A variety of elements generally play a role in driving the elevated seasonal demand for gold during the dying months of every year.

Some of the top reasons are:

Usually, jewelry purchases in India and China are on the rise during the festive and wedding season.

Reserves amassed by the monetary authority continue to be rebalanced, favoring more buying of the yellow metal.

Year-end risk management and portfolio modifications for institutions.

Gold’s Performance During the Holidays

December is usually not a month when gold prices soar, but rather a gradual rise.

The yellow metal is often a safer bet than other assets during economic downturns or periods of geopolitical unrest.

Although gold’s value fluctuates with the economy as a whole, it rarely offers the kind of spectacular returns seen with cryptos.

Still, bullion’s massive surge this year to repeated record highs to hit a historic peak of $4,380 an ounce, and the subsequent pullback has been unprecedented.

Gold is starting to recoup from losses over the last few weeks to trade above $4,100 per ounce, which is substantial. The longs are now deep green in what has become a very tradable market.

The precious metal has started to pull back from deep losses as the shutdown ends, and the US debt is expected to hit a historic $40 trillion soon.

The yellow metal is now just 7% away from new record highs, and investors know deficit spending is only going up from the end to the shutdown.

Bitcoin as a Store-of-Value Asset

The widespread belief that Bitcoin is a type of “digital gold” has grown substantially since its price reached around $16,000 in November 2022. There has been consistent appreciation in value since then.

The first time Bitcoin’s value was more than $100,000 was on December 5, 2024; however, it has subsequently risen above this mark.

At its peak, in October this year, the asset was worth little over $125,000, but similar to gold, it has since pulled back significantly.

Still, the token has largely held above the psychologically important $100,000 mark, falling below that level on a few instances only briefly.

Bitcoin is a promising alternative to monetary inflation due to its decentralized structure and restricted supply of 21 million coins.

But it is generally considered a riskier investment than gold. When investor confidence is high, prices can rise sharply; when it’s low, they can fall sharply as well.

Historically, Bitcoin’s performance during the final quarter of the year has been quite noteworthy.

Source: TradingView

Macro Driving Assets More This Year

For this year, the current state of the economy has the most impact on whether or not a Christmas rally succeeds.

Important factors include market capital availability, price stability indicators, and central bank policies, especially the Federal Reserve.

At its meeting in October 2025, the US central bank cut the federal funds rate by 25 basis points (bps), setting a new target range of 3.75%-4.00%.

Borrowing costs dropped to their lowest level since late 2022 as a consequence of the move, which was in line with market expectations and followed a similar cut in September.

The dollar tends to lose value as interest rates go down, which can make investors more interested in alternative assets such as Bitcoin.

The official US inflation rate for September 2025 was 3.0%, up from 2.9% in August, according to the report. Core inflation, however, fell slightly, from 3.1% to 3.0%.

During times of elevated inflation, there is often a notable increase in interest towards alternative assets such as Bitcoin and safe-haven gold.

In contrast to traditional assets, the liquidity of Bitcoin exhibits significantly higher volatility.

The purchase of exchange-traded funds (ETFs) and small amounts of capital by institutions can greatly influence short-term price fluctuations.

The difference between those assets is the buyers.

Jewelers, sovereign wealth funds, and central banks are the primary purchasers of gold. Digital currency enthusiasts of the younger age, tech trailblazers, and retail investors are Bitcoin’s most vocal supporters.

Gold & Bitcoin Performance

Both assets have risen in tandem during several rallies over the past few years, with 2025 becoming a special year for the trend.

But there have been times when the cycle of each asset began after a rally in the other.

To combat the economic slump brought on by the epidemic in 2020, the government enacted massive stimulus programs.

Individuals looking to protect their money flocked to assets that promised stability as fiat currencies faced decline.

While Bitcoin gained momentum in the second half of the year, gold had a meteoric rise at the start of the year.

Gold ended the year with small gains at $1,900, while Bitcoin was approaching its peak and ending close to $29,000 in December 2020.

That shows Bitcoin has usually done better than traditional assets like gold when there is a lot of money floating about and interest rates are low.

Inflation spiked between 2021 and 2022, prompting central banks to raise interest rates significantly in response.

Because of its speculative character, risk assets like Bitcoin took a major hit during the recent market crash.

Market players sought gold as a conventional safe-haven asset, and its price went through phases of rise, demonstrating extraordinary durability.

In periods of monetary tightening and market stress, this case study shows that gold typically retains its value better than Bitcoin.

With the shutdown freezing data, and an end to the fiscal impasse in Washington now, inflation reveals will have a bigger say on which of the two assets will win the Christmas rally race.

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