My uncle Brian has this theory about the stock market around Christmas time. According to him, fund managers buy everything in December so their quarterly reports look brilliant to clients, then quietly dump it all in January before anyone notices.

He calls it the "Annual Lying Season."

Turns out Brian might be onto something, though the actual term is considerably less cynical: the Santa Rally. Markets historically pop at year-end—not because of Christmas magic, but because of institutional money flow patterns that are both predictable and utterly mercenary.

The question is whether crypto gets invited to this particular party, or whether we're the distant cousin nobody wants at the dinner table.

Let's sort through the signals, shall we?

🎅 The Santa Rally Setup (Stocks vs. Crypto)

Institutions are loading up on stocks. Retail sold crypto. Guess which one rallies first?

Here's how the traditional Santa Rally works: Institutional investors increase stock exposure heading into year-end so their clients see they were holding the top-performing names. It's financial theater, really—make the year-end statement look clever, worry about January later.

For crypto? Different story entirely. Most flows still come from retail investors, and retail follows a very different calendar. Many expected the crypto market to peak in November or December (the four-year cycle narrative). Plus, people needed cash for Christmas presents, which means selling their holdings.

November and December were brutal for crypto, so retail did what retail does—sold their worst performers. Meanwhile, institutions may have been doing tax-loss harvesting (selling underperformers to reduce tax bills), which added to the selling pressure.

But here's the twist: If both retail and institutional selling is done, then most of the downward pressure is gone. Add in aggressive short positions from traders expecting lower lows, low holiday liquidity, and fresh injections from the Fed's "not QE" QE program, and you've got a recipe for a squeeze.

All it takes is a little buying pressure to send prices rocketing when everyone's positioned wrong.

The catch? Stocks will probably rally first. Crypto's meaningful gains likely wait until January, when investors reallocate to assets they sold and when actual catalysts arrive—specifically, the CLARITY Act review.

📊 The CLARITY Act: Crypto's Real Catalyst

If the GENIUS Act moved markets, the CLARITY Act could launch them.

Remember the GENIUS Act? It was the only bullish crypto catalyst in 2025 that actually moved prices significantly. The CLARITY Act is similar legislation, which means we could see similar price action.

History suggests crypto prices rally before these bills pass and continue rallying after. It's the anticipation that moves markets, not just the actual event.

Timeline: The CLARITY Act review is expected in January. If institutions and retail have finished their year-end selling, and shorts are piled up expecting lower prices, then January could be explosive.

Next week should be neutral for crypto. But if retail investors get enough Christmas cash to ape into the market? The shorts get squeezed, and things get interesting fast.

The Bottom Line (In Proper English)

Look, the Santa Rally is probably happening—but it'll favor stocks over crypto initially. The good news? Year-end selling pressure (both retail capitulation and institutional tax-loss harvesting) is likely done.

Next week should be quiet. But if retail gets enough Christmas money to squeeze the shorts, things could get properly interesting. The real fireworks wait until January when the CLARITY Act review begins and investors reallocate capital.

It's a bit like waiting for a delayed train on Boxing Day, really. You know it's coming eventually, you're just not entirely sure when it'll arrive—or whether you'll still be awake when it does.

My prediction? Stocks rally first. Crypto follows in January. The CLARITY Act review triggers the same pre-event rally we saw with the GENIUS Act. And everyone who went aggressively short in December gets absolutely rinsed.

I'll remind you that forecasting crypto is like predicting British weather—theoretically possible, practically humbling, and you're guaranteed to look foolish at least 30% of the time.

Question for you: Are you positioned for a January rally, or are you one of the shorts waiting to get squeezed?