Should I buy tech stocks or crypto? (Op. Ed.)

Despite the Federal Reserve’s recent rate cut of another quarter percent on Wednesday, the price of Bitcoin plummeted.

The asset fell as much as 15% at one point. Meanwhile, this all-important vital sign for the health of the Web3 blockchain economy continues to drop 3.5% in the 30 days ending December 24.

But it wasn’t just the Bitcoin and crypto markets that fell. Tech stocks on the NASDAQ Composite also fell 3% over the past five days of trading on Wall Street. So will there be a Santa rally this year to save Christmas and Hanukkah from the Grinch?

How tech Nasdaq stocks do in Santa rallies

Most likely, the fall in stocks and cryptocurrency over the past week has been in part simply a matter of markets pausing to catch their breath. Both soared to record highs in the first half of the month.

Dominic Pappalardo, chief multi-asset strategist at Morningstar Investment Management, says these lofty valuations leave little room for error. He said: “Today’s extreme market reaction is being driven by today’s extremely rich valuations across all risk assets.”

Meanwhile, the revision of the Fed’s outlook, which foresees fewer cuts in the future, after the last one in December, may have dampened the enthusiasm of the markets. “The move in equity markets can be attributed to the Fed’s updated outlook for fewer cuts in 2025,” Pappalardo said.

There will probably be a Santa rally this year.

Historical data since 1950 shows that US stocks have achieved this seasonal rally in 79% of the years. Historically, the average gain of stocks during this rally is around 1.3%.

However, keep in mind that NASDAQ’s gains and losses tend to be higher than those of the global US stock market. In addition, stock gains and losses since the pandemic have also shown a higher standard deviation than most historical periods.

How Cryptos like Bitcoin do at Holiday Pumps

For savers, investors, and cryptocurrency traders comparing high-tech stocks to Bitcoin and altcoins, it’s worth noting that historically, crypto also gets a Santa bump during the holidays.

Also, Santa’s pump for crypto was often steeper than stock gains during this period. However, keep in mind that losses in altcoins can also exceed those in stocks when Krampus brings the coal to the financial markets.

Last year’s Santa Claus rally saw a 4.87% increase in the price of Bitcoin, while the NASDAQ Composite rose just 0.46%.

In the previous year, the price of Bitcoin fell by -0.61 while the NASDAQ had gained 0.04%. However, during the 2021 holidays, instead of a Santa rally, there was a Krampus drop.

Bitcoin lost a noticeably higher percentage than the NASDAQ. While tech stocks on this benchmark fell -0.59%, Bitcoin capitulated -6.8%.

Final result for year-end investors in 2024

Both technology stocks and cryptocurrencies like Bitcoin are enjoying a very robust recovery that many analysts seem poised to gain quite a bit more ground for these assets in the long term.

During the last five days of December and the first two days of January, there is usually a rally for stocks and cryptocurrencies. Whatever the direction of the markets, Bitcoin usually goes further.

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