Bitcoin s December Surge and Market Dynamics

On December 29, Bitcoin briefly surpassed 90,000, lifting its market cap above 1.8 trillion before retreating. This spike raised hopes for year-end gains but revealed weak liquidity and a bearish market structure. Despite a decrease in selling pressure, buyers remain cautious. However, rising funding rates and 1 billion in open interest indicate that retail traders are betting on a recovery in January.
After peaking at a local high of 90,300, bitcoin s momentum faltered.
The quick drop below the 90,000 mark exposed a significant liquidity void and heavy supply at that level. This rejection reinforces the existing bearish trend, suggesting that the recent downtrend lacks sufficient buying pressure to establish a new support level.
Some analysts express skepticism about Bitcoin s ability to reach its January 1 price of 93,500 by December 31. They point to ongoing outflows from spot Bitcoin exchange-traded funds ETFs in late December as evidence that large investors are adopting a risk-off approach.
Market data reveals that since December 15, Bitcoin ETFs have seen net inflows only once, with outflows dominating the rest of the period. The Fear & Greed Index, which was around 25 at the time of writing, suggests that the anticipated Santa Claus rally may not occur. However, technical indicators like the relative strength index RSI , currently around 45 to 50, indicate a reset from previous overbought conditions. This suggests that while aggressive selling has subsided, buyers have not yet fully taken control.
Despite these challenges, some market sentiment indicators suggest that investors are anticipating a Bitcoin recovery in January. For example, Cryptoquant data shows that the Bitcoin funding rate a key measure of crypto sentiment is at its highest level in over two months, indicating growing demand for bullish bets in the perpetual futures market.
Additionally, the latest Cryptoquant market report highlights a 1 billion increase in Bitcoin open interest as further evidence against the capitulation narrative. According to the December 27 report, 450 million in fresh leverage was added in seven days, while Bitcoin positions grew 2 weekly in December. This opening of new positions suggests that traders are betting on a recovery.
Every tracked exchange maintained or grew positions rather than clearing risk during December s decline.
This behavior contradicts capitulation signals. True market bottoms typically occur when leverage is cleared, not built. The Fear Index at 27 with growing open interest suggests that stubborn optimism persists despite recent activity collapse and whale withdrawals.
In summary, while Bitcoin experienced a brief surge on December 29 followed by a retreat, indicators show a mix of caution and optimism among investors. The current market dynamics suggest that while large players remain risk-averse, retail traders are positioning themselves for a potential recovery in January.