Will Bitcoin Price See the ‘Santa Rally’ Along With S&P 500? 

Bitcoin price dropped below $90,000 over the weekend as analysts flagged declining liquidity, weak momentum, and waning bullish catalysts. Traders now watch $88,000 as a key level before a possible deeper correction toward $85,000 or $82,000, as outlined by Altcoin Sherpa.

This comes amid diverging moves between Bitcoin and traditional equities. While the S&P 500 remains near record highs, Bitcoin continues to consolidate near two-month lows. The breakdown below $90K followed the Federal Reserve’s rate cut, which traders treated as a sell-the-news event rather than a bullish signal.

Will Bitcoin Price See the Santa Rally This Time?

Bitcoin’s poor performance in Q4 2025 has disappointed investors. Even with major macroeconomic updates, such as the end of quantitative tightening and Fed rate cuts, BTC bulls have failed to trigger a strong upside move. As a result, the hopes for a Santa rally are somewhat waning.

Market analyst Daan Crypto Trades noted that Bitcoin price has remained largely flat for two weeks in December. He called the current scenario choppy with low conviction.

The analyst believes that BTC is likely to see subdued volumes and liquidity into the year-end. Daan Crypto Trades believes that only after the New Year 2026, market participants return and trading activity will normalize. Thus, he doesn’t expect any significant Bitcoin price movement in the near term, during the Christmas holiday period.

During the weekend, BTC has once again corrected to test the support at $88,000. Market analyst Altcoin Sherpa warned that Bitcoin could face further downside if the $88,000 support level fails.

He indicated that a break below that level may trigger a swift move toward $85,000, and further down to $82,000. However, sharing his personal view, Sherpa stated that he doesn’t expect much correction ahead.

Bitcoin Price Move, And the S&P 500 Decoupling?

As said, Bitcoin has shown a major decoupling with the US equities this year in 2025. For a long time, BTC and digital assets have been seen as risk assets. As a result, they have been seen as a proxy for the equity markets.

However, this time, the Bitcoin price movement shows a clear divergence from traditional equity markets. While BTC is down nearly 36% from its all-time highs, the S&P 500 and Nasdaq are making fresh highs.

Market data shows that Bitcoin’s correlation with equities has fallen to its lowest level of the year. For much of the current cycle, Bitcoin traded in line with high-beta technology stocks. Strong ETF inflows, institutional participation, and corporate treasury allocations support this during Q3.

The recent decoupling, however, suggests a shift in market behavior. But analysts note that Bitcoin is not lagging equities, instead it is consolidating independently.

On the other hand, the S&P 500 seems to be preparing for the Santa Claus rally. Since the 1929 Great Depression, the S&P 500 has risen during 79% of Santa Claus Rally periods, with an average gain of 1.6%.

The Santa Claus Rally traditionally spans the final five trading days of December and the first two trading days of January. Since 1950, the index has posted gains in 79% of these windows as well. Over the past eight years, the S&P 500 has declined only once during this period.

In the last 75 years, the final two weeks of the year have been the strongest for US equities. Based on these trends, some analysts suggest the S&P 500 could approach the 7,000 level by year-end.

All Eyes on US CPI and BoJ Rate Hike Decision

Macro indicators like the US CPI, data, jobless claims, and Bank of Japan’s (BoJ) rate hike decision will play a crucial role in deciding the Bitcoin price trajectory ahead. The broader crypto market is already showing early signs of pressure.

Market sentiment continues to deteriorate, with the Fear and Greed Index slipping further into “Extreme Fear” territory, at 16. Despite the decline, sentiment levels remain higher than those recorded last month.

Moreover, the Bank of Japan is expected to announced rate hike one more time on December 19. As per the data from Polymarket, there’s a 97.5% chance of a BoJ rate hike in December.

Market analyst Ted Pillows noted that Bitcoin price has historically declined between 20% and 30% following Japan’s previous interest rate hikes. With the Bank of Japan expected to raise rates again on December 19, the analyst questioned whether Bitcoin could face a similar reaction. A similar correction to the past would put BTC at $70,000.