Santa Claus Rally Skipped? Stocks, Crypto Offer Little Cheer This Holiday Season

Key Takeaways

• The traditional “Santa Claus Rally” failed to materialize this year.
• Major indices like the S&P 500 and FTSE 100 experienced declines in December instead of the expected seasonal boost.
• Bitcoin experienced a significant gain this month, surpassing $100,000, but then retraced around Christmas.

The traditional “Santa Claus Rally,” which usually gives stock prices a festive lift in late December, has largely bypassed Wall Street this year, leaving investors with coal in their stockings.

Although Santa decided to skip his usual visit to the markets, the S&P 500 remains poised to finish the year on a high note. Bitcoin also enjoyed a robust 2024, proving it can thrive even without St. Nick’s seasonal support.

Santa Didn’t Boost Stocks

The “Santa Claus Rally,” a seasonal boost typically seen in December, has historically provided strong returns for investors.

Over the past 50 years, global indices have averaged a 1.6% gain in December, compared to a more modest 0.6% return from January to November.

The UK’s FTSE 100 has experienced a Santa Claus Rally 24 times since 1994, while the S&P 500 has seen one 23 times.

However, 2024 has so far defied tradition. Both indices have posted declines, with the S&P 500 down by 2.7% and the FTSE 100 falling by 2.2%. The Federal Reserve’s cautious approach to further rate cuts has weighed on market sentiment.

Though the S&P 500 is set to close a strong year overall, December’s performance has been lackluster.

Experts have emphasized that seasonal trends should not be relied upon for investment decisions, advocating instead for a diversified, long-term strategy. After all, December’s volatility can be unpredictable.

For comparison, in 2023, strong gains lifted the markets, but years like 2022 and 2018 proved that a rally is never guaranteed.

This December, the Dow Jones managed a modest 1.7% increase yet ended the month with a 4% loss. The Nasdaq outperformed, gaining 2.8% for the holiday season, while the S&P 500 posted a 2.2% gain but lost 1.3% in December.

Across the Atlantic, European markets also saw mixed results. The FTSE 100 remained almost flat around Christmas, while France’s CAC 40 rose by 1.2%, and Germany’s DAX 40 dipped by 0.5%.

Crypto Also Slowed

Bitcoin (BTC) experienced  a dip of over 2% over the past week despite posting a modest 0.8% daily gain on lower 24-hour trading volumes.

Ethereum (ETH) saw a more favorable performance, rising by 1.5%, largely due to price gains on Friday and Saturday.

Smaller altcoins also showed some positive momentum, with BNB up 12%, Solana (SOL) gaining 8%, and Toncoin (TON) rising by 11% during the week.

Bitcoin had surged past $100,000 in December but retraced around Christmas, reflecting broader market volatility.

On the flip side, some coins faced challenges. Fantom (FTM) lost 20%, Ethena (ENA) saw a 5% drop, and Ondo (ONDO) declined by 15%.

Rising energy prices sparked a Bitcoin miner selloff, dampening market sentiment, while high valuations also weighed on prices.

Another factor affecting crypto is Bitcoin’s increasing correlation with the Nasdaq. The two are now syncing over 70% of the time, linking cryptocurrency to the broader tech sector slump.

With a few days remaining in the year, the crypto market remains fluid, and further shifts are possible before the calendar turns to 2024.