The Santa Rally — Wall Street’s beloved year-end tradition — has found an eager audience among Chinese crypto Twitter’s most followed analysts.
Far from dismissing it as Western-market folklore, key opinion leaders in the Chinese-speaking community are treating the final trading days of 2025 as a critical signal of what lies ahead in 2026.
Phyrex, one of the most cited macro analysts in Chinese crypto circles, argues that the Santa Rally is not merely a statistical curiosity. “It’s more like a barometer of market risk appetite,” he wrote. “If markets manage to rise as expected from Christmas through New Year — without fresh macro catalysts — it confirms that investors are still willing to allocate to risk assets, setting the emotional foundation for next year’s pricing.”
The flip side carries weight, too. A failed rally, Phyrex warns, often signals that risk appetite has not recovered, leaving markets vulnerable to weakness or choppy trading well into January and beyond.
The analyst points to several mechanical factors that typically support year-end gains. Tax-loss harvesting wraps up by mid-December, freeing capital to rotate back into equities. Institutional desks go quiet for the holidays, thinning out volumes and allowing modest buying pressure to move indices higher. Year-end bonuses and automatic 401(k) contributions add passive bid support.
Michael Chao, a US-focused markets commentator popular on Chinese Twitter, highlighted the historical odds: since 1950, the S&P 500 has risen 75% of the time during the Santa Rally window, posting an average gain of 1.55%.
Not everyone is popping champagne early. Cryptojiejie noted that Bitcoin and Ethereum global volumes have shrunk to 2025 lows, calling current conditions “garbage time” for traders. She advised breakout-focused traders to step back and enjoy the holidays until liquidity returns.
Macro headwinds add to the caution. Zhou Financial wrote that the Bank of Japan’s December rate hike to 0.75% has raised concerns about the unwinding of the yen carry trade, while the Federal Reserve’s hawkish 25-basis-point rate cut — paired with a dot plot signaling only two cuts through 2026 — disappointed markets that had expected more accommodation.
Phyrex framed the tension bluntly: “If the market still can’t form an effective rally under seasonal tailwinds and gradually recovering liquidity, it likely means the current high-rate environment’s pressure on the economy has already overwhelmed the sentiment boost from holiday factors.”
For Phyrex, this year’s Santa Rally carries outsized significance. He sees it as effectively a preview of Q1 2026 expectations. The logic is straightforward: if investors refuse to bid up risk assets even when seasonal patterns, sentiment vacuums, and returning liquidity all align in their favor, something deeper may be broken.
The intense focus on Wall Street may partly reflect a lack of domestic options. Earlier this month, seven major Chinese financial industry associations issued a joint risk warning — the most comprehensive crypto crackdown since the 2021 ban that drove all exchanges out of the country.
The statement explicitly prohibited real-world asset (RWA) tokenization for the first time, alongside stablecoins, airdrops, and mining. With regulators sealing off virtually every on-ramp, Chinese crypto investors have little choice but to watch global markets from the sidelines.
As Chinese crypto Twitter watches Wall Street just as closely as anyone else, all eyes are on whether Santa shows up.
