Bitcoin continues to face headwinds, failing to sustain upward moves despite some supportive developments. A brief rally during Asian trading hours once again gave way to selling pressure as US markets opened, keeping the cryptocurrency below the psychologically significant $90,000 level.
Institutional Holdings Show Resilience
A closer look at institutional investment vehicles reveals a notable divergence. While Bitcoin’s spot price has fallen approximately 36% from its October record high of $126,080, holdings within US exchange-traded funds have remained remarkably stable. Data from December 18 shows these ETFs experienced outflows of $161 million, following a substantial single-day inflow of $457 million. The broader picture, however, indicates strength:
- Total Assets Under Management: $111 billion, representing 1.32 million BTC.
- BlackRock’s IBIT: Continued to attract inflows, adding $33 million.
- Holdings Since Peak: The amount of Bitcoin held across these funds has declined by only 4% since October.
This stability suggests that the persistent selling pressure is not originating from the ETF investor base, which has largely maintained its positions through the market downturn.
A Recurring Trading Pattern
The price action on December 19 followed a now-familiar script. Bitcoin climbed from $85,200 to $89,000 during the Asian session, partly driven by the Bank of Japan’s interest rate decision. The momentum reversed, however, with the opening of US markets, pushing the price back toward $88,000. This pattern of Asian-session gains erased by US-session selling has characterized much of the recent week.
Bitcoin’s market dominance has concurrently risen to 60%, its highest level since mid-November, signaling a rotation of capital away from alternative cryptocurrencies and into the market leader.
Derivatives Signal a Shift in Sentiment
The derivatives market is flashing cautiously optimistic signals. The funding rate for perpetual swaps has increased to 0.085%, marking the highest level since November 21. Concurrently, approximately 66% of traders are now positioned for a price increase. The rate of growth in open interest has outpaced the spot price movement, indicating the establishment of new leveraged long positions.
Should investors sell immediately? Or is it worth buying Bitcoin?
From a technical perspective, Bitcoin is consolidating within a narrowing range. The 50-day moving average at $88,177 and the 20-day average at $86,997 are converging. Bollinger Bands have tightened between $88,605 and $84,969—a classic technical setup that often precedes a significant expansion in volatility.
Regulatory Developments Provide Tailwinds
The regulatory environment continues to evolve in a manner favorable to the crypto sector. The US Senate confirmed crypto-friendly Mike Selig as Chair of the Commodity Futures Trading Commission (CFTC). Separately, the Federal Reserve formally rescinded its restrictive 2023 crypto banking guidelines, establishing a new framework for banks engaging in cryptocurrency-related activities.
Adding to the fundamental outlook, Citigroup released its 12-month price targets on December 19. Analysts presented a base-case scenario of $143,000, representing a potential 62% gain from current levels. Their bullish case envisions a climb to $189,000. These projections are based on anticipated continued ETF inflows of roughly $15 billion and a stable equity market.
A Critical Juncture for Price
The coming sessions are likely to determine the near-term direction. As long as Bitcoin trades below $90,000, sellers retain control. A decisive break above this resistance could, however, trigger momentum buying—a move that would be amplified by the buildup of long positions in the derivatives market.
On the downside, the area around $85,000 forms the first major support zone. A breach below this level would see the next significant support at $78,500, a threshold Citigroup also identified as critical in its bear-case scenario.
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