Crypto analyst says market bullish for Santa Claus rally

Though the crypto market has so far failed to recover from the shock of the October crash, a leading analyst thinks the current setup looks bullish for a Santa Claus rally.

A widely believed phenomenon in traditional markets, a Santa Claus rally is a calendar effect in which stock prices rise during the last five trading days in December around Christmas and the first two trading days in the following January.

The phenomenon, driven by year-end optimism and portfolio rebalancing, is also extended to the digital assets market.

In the crypto market, reduced exchange liquidity, year-end tax positioning, and renewed risk appetite are expected to lead to the Santa Claus rally.

Related: Analyst predicts Bitcoin is gearing up for an early Santa rally

Analyst says EOY looks good with Santa Claus rally

Spencer Hallarn, global OTC head at the crypto capital markets partner GSR, said the setup looks "pretty bullish" for a Santa rally. The end of 2025 is looking good, he added.

Is we getting a Santa rally?

From Spencer Hallarn, our Global Head of OTC:

"I think we’ve shaken out a lot of the bulls and built a solid base of skepticism. Perp funding rates are very low or negative, which suggests there isn’t much leverage in the system. Taken together,…

— Frank Chaparro (@fintechfrank) December 9, 2025

The Bitcoin crash shook out bulls and led to a lot of skepticism, but the falling perpetual funding rates indicate a lack of leverage in the market, he argued.

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Coinbase optimistic about December end

The institutional arm of the largest U.S. crypto trading exchange, Coinbase (Nasdaq: COIN), also noted that Bitcoin perp funding rates have dropped and speculative excess has been flushed out.

A rocky November may have set the stage for a December to remember.

Positioning reset in November:
• Open interest across BTC/ETH/SOL perps was down 16% MoM
• U.S. spot ETFs saw $3.5B $BTC and $1.4B $ETH in outflows
• BTC perp funding rates dropped 2σ below their 90-day… pic.twitter.com/qApZFuMF2X

— Coinbase Institutional 🛡️ (@CoinbaseInsto) December 9, 2025

Lower leverage translates to a healthier market structure and less vulnerability to sharp drawdowns toward the end of the year, it expanded.

Crypto market struggles to recover

The total crypto market cap stood at $3.16 trillion at the time of writing, down 1.5% in the last 24 hours.

Bitcoin was exchanging hands at $92,680, down 1.3%. Ethereum (ETH) was trading at $3,394, up 0.44%. XRP was down 3.8%, trading at $2.07 at press time.

Related: Analyst predicts Bitcoin is gearing up for an early Santa rally