Historical trends in cryptocurrency markets show that periods of decline can sometimes precede a rebound. Bitcoin’s muted performance in October may represent such a pause, potentially leading to more stability before the year ends. The market has occasionally benefited from a seasonal event known as the Santa Claus Rally, a modest boost in December often driven by stronger investor sentiment and lighter trading activity. This pattern suggests that Bitcoin’s recent softness could be temporary, with a potential rebound still possible.
In brief
- •Bitcoin may see a seasonal Santa Claus Rally in December driven by calmer trading and stronger investor sentiment.
- •Expectations of Federal Reserve rate cuts are influencing market optimism and shaping potential year-end gains.
- •Demand on the spot market has picked up as smaller investors steadily accumulate after October’s declines.
October Setbacks and Stabilization
Despite reaching an all-time high early in October, Bitcoin’s expected rally stalled, culminating in a sharp decline later in the month. Since then, prices have begun to stabilize, indicating a potential market bottom. Investor focus is now shifting toward a possible year-end rebound. According to Coinglass, Bitcoin has closed six of the last eight Decembers with positive returns, posting gains between 8% and 46%, showing the month’s historical tendency for growth.
This stabilization is reflected in the recent move toward $106,000, which indicates that buyers are re-entering the market after a period of heavy selling. According to Nick Ruck, director at LVRG Research, market behavior is shifting from panic-driven exits to more measured purchases by long-term investors. Expectations of Federal Reserve rate cuts and growing interest from institutional participants are seen as potential drivers for a strong year-end finish.
Demand for Bitcoin has also risen on the spot market, according to Julio Moreno, Head of Research at CryptoQuant. He noted that the weekend saw a sustained increase in buying activity, the first since early October. This renewed interest, combined with reduced panic selling, may contribute to a seasonal rally often seen in December, when calmer holiday trading and stronger market confidence have historically contributed to price gains.
Trump’s Tariff Dividend and Its Impact on Bitcoin
Market participants are also monitoring U.S. President Donald Trump’s proposal for a $2,000 “tariff dividend” payment to citizens. Augustine Fan, Head of Insights at SignalPlus, explained that the plan includes direct payments that resemble the COVID-19 relief checks, injecting additional liquidity into the system.
This infusion of cash is expected to support risk-oriented assets such as Bitcoin, and early market activity appears to reflect optimism around these initiatives.
The ‘tariff-dividends’ are reminiscent of the covid stimulus checks that were a direct and effective money-printing stimulus, while the ultra-long duration mortgages will improve housing affordability while adding extra capital leverage to the system.
Augustine Fan
Bitcoin Volatility and Year-End Market Dynamics
So, what other factors are shaping Bitcoin’s price behavior? Analysts note that volatility is increasingly driven by market structure and investor activity rather than short-term speculation:
- •Rachel Lin, CEO and co-founder of SynFutures, said future price swings may stay high, now influenced more by institutional trading, derivatives, and shifts in liquidity than by short-term speculation.
- •She highlighted that global liquidity and real interest rates remain critical to watch, with Bitcoin historically showing a 0.6 to 0.7 correlation with U.S. liquidity measures like the Fed’s balance sheet and M2 money supply.
- •A slowdown or reversal of easing in response to tariff-related inflation could heighten volatility next year.
- •On-chain data indicates smaller investors are steadily accumulating Bitcoin despite a 3% drop in November following October’s turbulent trading.
- •At the same time, holders with more than 10,000 BTC have been gradually reducing their positions built during early ETF inflows, while smaller wallets under 1,000 BTC have steadily increased their holdings, helping to balance the impact of selling by larger investors.
While the Santa Claus Rally has historically occurred in December, this year’s outlook suggests it could happen again. A year-end surge in Bitcoin prices may spark renewed momentum across altcoins, supported by seasonal trends, renewed investor confidence, and continued accumulation by long-term holders. However, these expectations remain speculative, as Bitcoin has declined nearly 2% as of today.