It's 19th v 17th, both teams locked on nine points after 13 games, with the Blues still searching for their first home win of the campaign.
"It's an important game, definitely," said the former Blues skipper, who will be working as a pundit for Amazon Prime.
"The table is starting to take shape - there's a top group, a middle group and a bottom group. If we can finish top of that mini group then we'll be safe at the end of the season.
"Palace have got some good individuals, but they're not at the same level they were last season. Losing (Michael) Olise was a massive loss for them. Them selling Joachim Anderson was a surprise to me. It's a game we can win."
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On the season so far, Holland said: "We couldn't have had a tougher start, Liverpool and Man City, but I think in both those games there were things to be encouraged by, and since then we've really grown into the season.
"Villa we could have won, Leicester we should have won. There are several games where we could have picked up more points, but the main thing is that the performances have been there. If we keep playing at that level then more results will inevitably go our way at some point.
"Over the course of the 13 games there's probably only been a game-and-a-half where we've maybe not been at our level - and that was Everton at home and West Ham away in the second half. Other than that we've been in every game and we've been competitive.
"I heard Scowie (former team-mate James Scowcroft) saying after the Man United game that he was '100%' that we'd stay up. I'm not quite there, but I'm certainly on the positive end of the scale and thinking we've got a really good shot at staying up."
Holland was part of the Town team that finished fifth in the Premier League back in 2000/01 fresh from stepping up from the Championship.
"I think the Man United draw at home was the one that gave us belief we could live at the level," he says. "That United team had just won the treble and had a midfield four of Keane, Scholes, Giggs and Beckham! I'm sure the win at Tottenham will have done the same for this team. That will have given them a whole heap of confidence.
"A few people have said 'you've got to beat the teams around you', but in the Premier League you never know where your results are going to come from. You do get some unlikely ones and ones you're not expecting.
"When you playing a Man United, City, Liverpool or Tottenham there is less expectation. It's these sort of games (against Palace) where the pressure and expectation ramps up a little bit. We've handled that brilliantly over the last couple of seasons in the Championship and League One. Now we've got to do it at this level."
He added: "It'll be nice to get back to Portman Road under the lights. I'm looking forward to it because I'm working pitch side. I still get excited walking out onto that pitch at Portman Road. Hopefully I [won't get any stick like Roy (Keane) did!"](https://www.eadt.co.uk/sport/24747530.ipswich-town-roy-keane-heated-exchange-supporter/)
_\- Matt Holland will be working as a pundit for Amazon Prime’s coverage of Ipswich Town v Crystal Palace. Prime members can watch festive football on Prime Video at no extra cost, including 20 Premier League matches such as Arsenal v Manchester United and every Boxing Day match – as well as a top UEFA Champions League clash on December 10th._