Market Overview
The crypto market is showing signs of caution as traders prefer Bitcoin over riskier altcoin investments. This shift comes amid high volatility and anticipation of central bank decisions.
Bitcoin Recovery
Bitcoin has recovered to around $92,000 following a significant liquidation event that wiped out about $2 billion in leveraged positions. Despite this rebound, traders are adopting a cautious stance as they await clarity from the Federal Reserve and other macroeconomic indicators.
Market Activity Focus
Market activity has largely focused on Bitcoin and Ethereum, with investors favoring strategies that minimize risk exposure. This cautious approach follows two months of macroeconomic uncertainty that caused substantial market turbulence. The total crypto market capitalization has bounced back to approximately $3.25 trillion.
Technical Indicators
Despite a sharp drawdown that briefly pushed Bitcoin below $88,000, the market absorbed the shock without prolonged selling pressure. Data from Glassnode shows Bitcoin’s 14‑day Relative Strength Index (RSI) climbed from 38.6 to 58.2, while spot trading volume increased by 13.2% to $11.1 billion, suggesting buyers were active at lower price levels.
Volatility Outlook
Year‑end implied volatility remains high, with traders positioning for Bitcoin to be either around $85,000 or $100,000 by December 26. Options data reveals a 25‑delta skew of 12.88% and a sharply negative volatility spread at –14.6%, indicating strong demand for downside protection despite the recent rebound.
Institutional Flows
Institutional flows have turned negative, with Bitcoin ETFs experiencing an outflow of $707.3 million. This reversal suggests some institutional investors are taking profits or reducing exposure after Bitcoin’s recent volatility. However, MicroStrategy continues its aggressive accumulation, purchasing 10,624 BTC for roughly $962.7 million at an average price of $90,615 per Bitcoin. The company now holds 660,624 BTC acquired for about $49.35 billion at an average cost of $74,696.
Futures and Funding
Traders are prioritizing yield capture over directional bets, evident from a decline in futures open interest to $30.6 billion. Perpetual funding rates have become more supportive, with long‑side payments rising to $522,700. The compressed CME basis has spurred interest in delta‑neutral strategies, especially in lower‑cap assets, indicating limited appetite for directional altcoin risk.
On‑Chain Metrics
On‑chain metrics show modest stabilization: active addresses rose slightly to 693,035 and entity‑adjusted transfer volume increased by 17.1% to $8.9 billion. However, the Realised Cap Change fell to just 0.7%, well below its low band, indicating softer capital inflows. Meanwhile, the STH‑to‑LTH ratio climbed to 18.5%, suggesting continued dominance by short‑term holders.
Expert Perspectives
Ignacio Aguirre, CMO at Bitget, warned that a stronger yen could trigger the unwinding of yen carry trades, potentially weighing on crypto valuations as leveraged positions reset globally. Arthur Azizov, founder and investor at B2 Ventures, highlighted key resistance levels for Bitcoin, noting that a decisive move above $100,000 could restore confidence and pave the way for higher levels. If Bitcoin fails to break this resistance, a deeper pullback to the $82,000–$88,000 range may be necessary.
Conclusion
The crypto market is navigating a period of caution and volatility, with traders favoring Bitcoin and stable strategies while awaiting macroeconomic clarity. Institutional flows have turned negative, yet MicroStrategy’s continued accumulation underscores divergent approaches. As the market absorbs recent shocks and prepares for central‑bank decisions, all eyes remain on key resistance levels and potential macroeconomic pressures.
