The cryptocurrency market has recently started to recover from last week’s decline.
Recent price action shows a buy-side bias among active holiday traders, with expectations for a “Christmas rally” in cryptocurrencies widely expected.
Investors may be more inclined to focus on altcoins during the holidays as Ethereum ETFs see increased inflows and some altcoins perform well.
Bitcoin (BTC) and the entire crypto market rose 5% on Tuesday as major currencies struggled to recover from last week’s sharp decline. Altcoins were at the heart of the market’s recovery, suggesting that investor optimism was driving the so-called “Christmas rally.”
Altcoins lead market recovery as investors drive Christmas rally
Crypto markets as a whole are on a tear ahead of Christmas, recovering from last week’s losses. Major coins such as Bitcoin, Ethereum, Solana, XRP and Dogecoin have all rallied as buying by holiday traders increased.
This appears to be a sign that the market is experiencing a "Christmas rally," where cryptocurrencies rise in the last few days of the year and into the first few trading days of January. Tuesday's price action also confirms that holiday traders are actively buying.
Another reason for the price recovery could be the widespread expectation that the cryptocurrency market may continue to rise after the holiday season.
This expectation may be related to Trump's inauguration as president on January 20. Many cryptocurrency market participants predict that Trump's inauguration may bring about a wave of market increases.
In addition, according to data from Coinglass, Ethereum ETFs saw inflows of $130.8 million on Monday, while Bitcoin ETFs saw outflows of $226.5 million. This difference suggests that investors are paying more attention to altcoins during this holiday season.
This can be seen from the double-digit gains of some altcoins such as Pudgy Penguins (PENGU), Hedera (HBAR), JasmyCoin (JASMY), and Stellar (XLM).
A similar trend is also seen in the overall stock market, which has been rising, suggesting that traditional investors are starting to buy into the “Christmas rally” narrative.