Bitcoin Under Pressure: Thin Holiday Liquidity and Institutional Caution Weigh on Market

Weak Market Phase Over Christmas

The crypto market remains under pressure even over Christmas. Bitcoin is trading at around $87,000, representing a decline of just over one percent compared to the previous day ^[1]. Year-to-date, this amounts to a loss of approximately eight percent ^[1].

Other cryptocurrencies are also showing weakness. Ethereum continues to trade below the $3,000 mark, while XRP and Solana are each down around two percent ^[1].

Extreme Fear and Declining Liquidity

Market sentiment remains weak. The Fear & Greed Index stands at 24 points, remaining in the extreme fear zone ^[1]. At the same time, liquidity continues to decline toward year-end, exacerbating the volatile situation ^[1].

Market observers point to absent institutional activity and low market breadth during Christmas week ^[1]. The thin holiday liquidity makes it difficult for Bitcoin to recover.

Massive Liquidations in Derivatives Trading

The situation in derivatives trading is particularly dramatic. In the early morning hours, long positions worth more than $500 million were liquidated ^[1]. Funding rates are consistently negative, and open interest continues to decline ^[1]. The market is thus reducing risk and responding particularly sensitively to smaller orders.

Treasury Stocks Under Pressure

Exhaustion is also spreading in the stock market. Crypto treasury stocks like Michael Saylor's (Micro)Strategy reached new yearly lows ^[1]. Many of these stocks are now trading at significant discounts to their net asset value ^[1]. The usual year-end rally appears to be absent.

Ongoing ETF Outflows

Institutional caution is also evident in crypto ETFs. Aggregate Bitcoin ETF flows were negative for four consecutive trading days ^[2]. Crypto funds recorded outflows of $952 million last week ^[2]. Investors have now withdrawn capital in six of the last ten weeks ^[2].

"Crypto ETF selling pressure is back," the Kobeissi Letter stated on Tuesday ^[2].

BlackRock as an Exception

An exception is BlackRock's iShares Bitcoin Trust (IBIT), which recorded minor inflows last week ^[2]. Bloomberg ETF analyst Eric Balchunas noted on Saturday that IBIT is the only ETF on Bloomberg's "2025 Flow Leaderboard" with a negative year-to-date return ^[2].

"The real takeaway is that it was sixth place despite the negative return," he added ^[2]. Balchunas emphasized that BlackRock's flagship Bitcoin fund recorded even more inflows than the SPDR Gold Shares Fund (GLD), which gained 64 percent ^[2].

"That's a really good sign long term IMO. If you can do $25 billion in a bad year, imagine the flow potential in a good year," Balchunas said ^[2].

Macroeconomic Factors Without Effect

The macro side is also providing no positive impetus at present. While the U.S. Consumer Price Index for November came in at 2.74 percent, below expectations, risk appetite did not increase noticeably ^[1].