Bitcoin managed to recover the 89,000 dollar level during the United States trading day after previously dropping to 87,000. Jasper de Mare, a strategist at Wintermute, noted that this movement responds mainly to a technical dynamic of position closing. According to current market data, the decline in open interest suggests that the rally is not due to new institutional purchases.
On the other hand, price action during US hours marks a notable shift compared to the last month of activity. Data from the Velo platform indicates that the currency suffered a cumulative drop of 20% during recent American sessions. Likewise, the asset managed to bounce strongly from lows recorded just twenty-four hours earlier in the market. This temporary trend change offers a necessary breather for retail traders who have faced weeks of constant price declines.
In addition, Coinglass reports reveal that the volume of outstanding contracts in Bitcoin decreased from 514,000 to 511,000 BTC. This simultaneous reduction with the price increase confirms that traders are closing their bearish bets in a hurried manner recently. However, the lack of new long positions indicates that the bullish sentiment is not yet dominant among the large institutional capitals. The market seems to be driven by risk hedging rather than real buying conviction.
The market adjusts strategic positions before the end of the annual financial cycle
On the other hand, spot Bitcoin exchange-traded funds (ETFs) recorded net outflows worth 19.3 million dollars. This figure marks the seventh consecutive day of redemptions, reflecting an asset rotation towards less risky positions for the year-end close. Specifically, BlackRock’s IBIT fund experienced significant withdrawals after having led capital inflows during much of this period. Many investors could be selling to offset tax losses before the cryptocurrencies calendar ends.
Likewise, the reduced liquidity typical of the Christmas holidays has exacerbated the erratic movements in digital asset prices. Analysts suggest that altcoins do not face the same selling pressure, as tax wash-sale rules often apply differently to those assets. Therefore, the repositioning of institutional portfolios will continue to be the main driver of volatility during the coming days. Caution prevails as the sector awaits the return of traditional investment flows in January.
Will Bitcoin be able to maintain its bullish trend upon starting the year 2026?
However, the recent expiry of 27 billion dollars in options has left the market in a quite fragile technical position. This event represented the largest contract expiry in the sector’s history, which drastically reduced the available global leverage. Realized volatility began to pick up again due to the intraday swings that have characterized the last trading sessions. In this way, traders are looking for clear recovery signals before committing new capital in an aggressive manner.
Finally, the outlook for the start of 2026 depends on the definitive return of institutional flows after the holiday period. Open interest remains the key metric to identify if the market is ready for a breakout toward new all-time highs. Nevertheless, de Mare recommends avoiding short-term signals that could be misleading due to the current low liquidity. The market awaits a stable price consolidation to define the direction the industry will take in the first quarter.
