The much-anticipated Santa Rally is in full swing, with stocks and cryptocurrency markets showing strong gains.
Historically, the period from Christmas Eve to New Year’s Eve has been favorable for the S&P 500, averaging a return of 1.3% since 1950. Monday’s 1.1% surge in the index has sparked optimism that this year’s rally could follow a similar trajectory.
Stock market sentiment gains strength
The S&P 500 shows resilience, climbing above the 6,000 mark on Monday. Data from Carson Group suggests that the rally often picks up pace in the latter half of December. Historically, the S&P 500 has posted a median return of 1.4% during the December 15–31 period. Over the past 74 years, back-to-back losses in this window have occurred only twice, reinforcing its reputation as a strong seasonal performer.
Substantial equity inflows further support investor enthusiasm. In the past nine weeks alone, U.S. equity ETFs have recorded $186 billion in inflows, more than double the average in the year’s first half. The options market is also seeing unprecedented activity, with daily trading volumes averaging 48 million contracts, half of which involve zero-day-to-expiration (0DTE) options.
Record activity in the options market
Last week’s options market activity reached historic levels. On Friday, $6.6 trillion of options contracts expired, adding to the market’s momentum. Election-year patterns have also provided a boost to investor sentiment. Historically, the S&P 500 has risen by an average of 3.7% between Election Day and the end of the year, with a success rate of 67%. This year, the index has already been up 4.5% since November 5, surpassing historical averages and building anticipation for a strong year-end finish.
The S&P Risk Appetite Index has also significantly increased, climbing to 41% this month, its highest level since April 2021. This represents a dramatic increase from August levels, reflecting heightened investor confidence in the market.
Bitcoin and Crypto markets join the rally
The crypto market is also experiencing a resurgence. Bitcoin increased by 0.32% to reach $98,747, buoyed by news that MicroStrategy plans to issue additional shares to buy more Bitcoin. The company has been aggressively adding to its Bitcoin holdings, purchasing $561 million last week, marking its seventh consecutive accumulation.
Other cryptocurrencies, including Ether and Solana, have followed Bitcoin’s upward momentum. However, traders are bracing for potential volatility on Friday, when a record $43 billion in open interest will expire on Deribit, including $13.95 billion in Bitcoin options and $3.77 billion in Ether options. Some analysts believe Bitcoin could hit $100,000 before the year ends, though uncertainties remain as market makers adjust positions.