As the cryptocurrency market approaches the holiday season, Bitcoin continues to experience a range-bound trading pattern, primarily due to thinning liquidity and year-end de-risking that is prompting many traders to withdraw from the market. In a recent assessment by QCP Capital, the perpetual open interest for Bitcoin has decreased by $3 billion, alongside a $2 billion drop for Ethereum within a single night. This decline in trading activity could make the market more susceptible to sharp price movements, despite an observed reduction in leverage.
As traditional markets are abuzz with activity—evidenced by gold achieving new all-time highs, having surged by 67% year-to-date—Bitcoin remains trapped in a consolidation phase. Analysts note that the cryptocurrency is fluctuating between support at $85,000 and resistance at $93,000, marking what some experts are calling its “weakest year-end performance in seven years.”
A notable event is on the horizon: this Friday, the market will see the expiry of record-breaking Boxing Day options, involving roughly 300,000 Bitcoin option contracts valued at $23.7 billion and 446,000 IBIT option contracts. This expiry represents over 50% of Deribit’s total open interest. The open interest for $85,000 puts has decreased from approximately 15,000 to around 12,000 contracts, indicating stabilization in the market. Meanwhile, $100,000 calls have remained fairly consistent at about 17,000 contracts, suggesting a glimmer of optimism for a potential year-end rally.
As year-end approaches, volatility is expected to rise. Bitcoin risk reversals are signaling a decline in bearish sentiment over the past month, gradually reverting to levels seen before October. Notably, the strategy of tax-loss harvesting ahead of the December 31 deadline may also contribute to short-term market fluctuations. Unlike equities, crypto investors can realize losses and re-establish positions immediately without facing wash-sale rule restrictions.
QCP emphasizes that holiday-driven moves in the past have typically reverted around this time of year, suggesting that liquidity may return in January, similar to patterns observed during low-liquidity weekends. However, on-chain data is painting a less optimistic picture, with declining buying pressure across several metrics. Analysis from CryptoQuant reveals a dwindling buy-volume divergence in Binance futures markets, reminiscent of the 2021 cycle when prices rose but volume consistently fell—a trend that shows no signs of recovery at present. Meanwhile, active addresses are sharply declining, indicating reduced market engagement.
In recent days, Bitcoin ETFs have seen significant outflows amounting to $461.8 million over a span of three days, with BlackRock and Fidelity leading the way with outflows of $173.6 million and $170.3 million, respectively, as the year-end risk-off sentiment takes hold. However, it’s noteworthy that institutional holders are maintaining their positions. Despite a more than 30% drawdown from highs earlier in October, U.S. spot Bitcoin ETF holdings have decreased by less than 5%, demonstrating that institutional investors are holding steady amid market volatility.
Analysts have differing opinions on the market’s future trajectory. Ray Youssef, CEO of NoOnes, attributes the predominant selling pressure to retail investors, particularly those utilizing leverage. Meanwhile, recent data shows that global crypto exchange-traded products (ETPs) have amassed $87 billion in net inflows since the launch of U.S. Bitcoin ETPs in January 2024.
Both Farzam Ehsani, Co-founder and CEO of VALR, and John Glover, Chief Investment Officer of Ledn, suggest the end of 2025 presents a challenging environment for cryptocurrencies, as seasonal trends, overbought conditions, and an investor shift towards more conservative instruments, like U.S. government bonds, affect market dynamics. Ehsani outlined two pathways: one suggesting that large players may be strategically positioning before renewed accumulation, and another indicating that macroeconomic pressures and Federal Reserve policies may be driving a deeper market reset.
Looking ahead, Glover anticipates continued volatility, predicting Bitcoin prices may drop between $71,000 and $84,000 before entering a fifth wave, potentially reaching as high as $145,000 to $160,000. Ehsani is more optimistic, projecting Bitcoin could revisit the $100,000 to $120,000 range by the second quarter of 2026, with a historical price peak possibly occurring as soon as the first half of 2026. Market analyst Michael Van De Poppe recently remarked that rejection at the $90,000 mark is not fatal, as long as the $86,000 support holds, providing a foundation for potential upward momentum in the near future.
