Could ‘January effect’ lift markets?

After getting snubbed by a Santa rally at the end of December, Wall Street may be due for a bump in January

article-image

Artwork by Crystal Le

share


This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.


Happy New Year from the Forward Guidance team! We launched this newsletter in 2024 and are excited to continue delivering our readers macro and crypto insights in 2025. 

As we head into Q1, let’s take a look at where markets could be headed next. 

After getting snubbed of a Santa rally at the end of December, Wall Street may be due for a bump in January. The so-called “January effect” is not a sure thing, but it has happened. 

The S&P 500 in January 2023 had a 5.8% return for the month. The index gained 2.12% during the first month of 2024. The tech-heavy Nasdaq Composite index has also been in the green for the last two Januaries, returning 1.95% in 2024 and 9.68% in 2023. 

But 2025 brings a new — well, old — administration to the White House, a Republican-majority Congress and a slower rate-cutting pace from the Fed. It’s a situation ripe for volatility, both in equities and crypto markets. 

In January 2017 (when Trump was inaugurated the first time), the S&P 500 had a 1.21% monthly return and the Nasdaq Composite gained 3.49%. Republican wins are generally followed by a boost in stocks (remember what we saw last November?), so keep that in mind. 

Coming up: The next US employment report coming out on Jan. 10, which should give us more clarity on where central bankers may send interest rates. 

As of yesterday, the odds of the FOMC holding interest rates steady later this month sat at 89%, according to CME Group data

On the crypto front, uncertainty is just as high. 

The euphoria from November has eased, and it seems like investors are in a holding pattern waiting to see if Trump comes through on his big industry promises. Leadership changes at the SEC, plus three new commissioners, could be a major catalyst. Any movement in Congress on a revised FIT21 bill (or a newly introduced bitcoin strategic reserve bill) would likely have a similar effect. 

But — as I’m telling my friends and family who’ve asked me countless times over the holidays — no one really knows what’s going to happen, with bitcoin or otherwise. 

Buckle up, because I’m certain we’re in for an eventful 2025.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

If pump.fun is a success, NYSE may have to return to a six-day workweek

article-image

One wallet bought pump.fun’s token from 500 different addresses

article-image

Asset allocator says fee compression could be a challenge as Grayscale converts more crypto funds to ETFs

article-image

The Stripe-acquired firm has big plans for a streamlined, multi-wallet future

article-image

Both founders of the former crypto lender have now landed in new crypto industry roles