Bitcoin and ether ended December with little sign that the year-end blowout traders often bank on, capping a quarter that shows how fragile crypto rallies can look as liquidity thins and risk appetite wanes.
The so-called ‘Santa Claus convention’ never really came to fruition. Instead, bitcoin’s repeated attempts to regain key levels sold off, while ether and large cap tokens followed lower.
Bitcoin is on track to end December down about 22%, the worst month since December 2018, while ether is on track to end Q4 2025 down 28.07%, according to data curated by CoinGlass.
A ‘Santa Claus rally’ is the tendency for markets to rise in the last week of December and early January, driven by thin liquidity, year-end portfolio rebalancing and upbeat holiday sentiment.
The weak finish matters because crypto has historically relied on strong late-year flows to generate early-cycle momentum. This time, December looked more like a positioning reset than the start of a new leg higher.
With bitcoin’s fourth-quarter performance turning sharply negative, the quarterly band now sounds like risk-off instead of risk-on.
The contrast with precious metals has been hard to miss.
Gold has pushed to new records on interest rate cut expectations and geopolitical stress, while silver has risen and platinum has also hit new highs, as previously reported by CoinDesk.
Gold has benefited from steady central bank demand and rising ETF allocations, reinforcing its role as a reserve-like hedge when investors are jittery.
Bitcoin, by comparison, has traded more like a high-beta asset. Even as the macro backdrop points towards easier policy, bitcoin has struggled to hold gains without a broader bid for risk.
The pattern has become familiar in late 2025, where rejections have been met by rapid profit-taking, leverage has been reduced over the holidays, and US hours have tended to see the biggest sell-off as funds purge positions.
Volatile interest rates and a faltering dollar have kept investors in capital preservation mode, a setup that tends to favor gold first and speculative assets later.
The first test will be whether bitcoin can hold its recent support zones into the new year. If it can’t, the failed Santa rally may be remembered as an early warning that the market still needs a deeper reset before the next sustained run.
