Bitcoin and Ethereum ended December with few signs of a year-end breakout, the quarter traders typically count on topping out, showing how fragile crypto rallies can look when liquidity is thin and risk appetite slips.
The so-called “Santa Claus rally” never really comes. Instead, Bitcoin’s repeated attempts to recapture key levels have been met with selloffs, while Ethereum and large-cap tokens have followed suit lower.
According to data compiled by CoinGlass, Bitcoin is expected to drop approximately 22% at the end of December, its worst month since December 2018, while Ethereum is expected to drop 28.07% at the end of the fourth quarter of 2025.
The “Santa Claus rally” refers to the market’s rise in the last week of December and early January driven by thin liquidity, year-end portfolio rebalancing and optimistic holiday sentiment.
This weak finish is important because cryptocurrencies have historically relied on strong year-end flows to build early-cycle momentum. This time, December looks more like a positioning reset than the start of a new leg higher.
With Bitcoin’s Q4 performance declining sharply, the quarterly broadside is now being interpreted as risk aversion rather than risk appetite.
The contrast with precious metals is hard to ignore.
As CoinDesk previously reported, gold prices hit new highs on interest rate cut expectations and geopolitical pressure, while silver prices soared and platinum prices also hit new highs.
Gold has benefited from steady central bank demand and increased allocations to ETFs, bolstering its role as a reserve-style hedge when investors get jittery.
In comparison, Bitcoin trades more like a high-beta asset. Even if the macro backdrop points to more accommodative policies, it will be difficult for Bitcoin to sustain gains without broader risks.
This pattern has become familiar in late 2025, with rallies being accompanied by rapid profit-taking, leverage being reduced over the holidays, and the U.S. session tending to see the heaviest selling as funds liquidate positions.
Volatility in yields and volatility in the dollar have investors in capital preservation mode, which often favors gold first and speculative assets second.
The first test will be whether Bitcoin can hold its recent support area into the new year. If not, a failed Santa Claus rally could be seen as a warning that the market still needs a deeper reset before its next sustained run.
