Christmas week is here, and Bitcoin investors are waiting to see if the market delivers a late push before the year ends.
With market fear falling and liquidity slowly improving, some analysts say Bitcoin could see a short-term bounce, even though the overall market remains mixed.
Low Market Fear Could Help Bitcoin
One positive sign for Bitcoin is the sharp drop in market volatility. The VIX, often called the fear index, has fallen to its lowest level of 2025. When fear is low, investors are usually more willing to take risks.
Ben Emons, Founder and CEO of FedWatch Advisors, says this environment could support a short-term rally in Bitcoin.
“Toward the end of the year, if liquidity comes back into the system, Bitcoin usually performs better,” Emons said.
Bitcoin Has Fallen Behind Gold
While Bitcoin has struggled in recent weeks, gold has moved to fresh record highs. This gap is one reason some analysts think Bitcoin has room to catch up.
According to Emons, Bitcoin has underperformed compared to gold, which could create an opportunity for a late-year move higher if market sentiment improves.
Fed Liquidity Is the Key Factor
The Federal Reserve remains a major driver of market direction. Recent U.S. data showed strong economic growth, while inflation came in near 2.9 percent.
Because inflation is still elevated, the Fed is expected to move cautiously with interest rate cuts. Even so, Emons believes the central bank will eventually deliver multiple cuts next year, which could help risk assets like Bitcoin.
In the short term, uncertainty around Fed policy could cause some hesitation, especially in bond markets.
Can Bitcoin Really Rally This Christmas?
A full breakout may be difficult, but analysts say a modest Santa rally is still possible if liquidity improves and buying pressure returns. With fear low and investors watching for year-end opportunities, Bitcoin could surprise the market in the final days of the year.
For now, all hopes are on whether Santa brings Bitcoin bulls a late Christmas gift, or if the crypto market stays quiet into the new year.