As the year draws to a close, Bitcoin is exhibiting a stubborn yet undeniable weakness. The world’s leading cryptocurrency has spent days in a fruitless struggle to breach the $89,000 level, facing consistent selling pressure from its most committed investors. Currently trading near $87,000, BTC sits roughly 30% below its all-time high from October, leaving the market to ponder its immediate trajectory.
Macro Backdrop Offers a Silver Lining
Despite the asset’s poor performance, the broader macroeconomic environment provides some consolation. U.S. core inflation dropped to 2.6% in November, marking its lowest point since April 2021. Headline inflation registered at 2.7%, coming in well below the anticipated 3.1%. This progress moves the Federal Reserve closer to its 2% target and could offer medium-term support for risk-sensitive assets like Bitcoin.
A Historically Weak Quarter
This positive macro news starkly contrasts with Bitcoin’s disappointing price action. The fourth quarter has historically been BTC’s strongest, delivering average gains of 77%. This year tells a different story: BTC has shed over 20% in Q4 2025. This decline represents a dramatic shift from the 48% gain in Q4 2024 and the 57% increase in Q4 2023. The weak appetite for risk is echoed across the digital asset space, with CoinMarketCap’s altcoin season indicator falling to a cycle low of 14 out of 100.
Sustained Selling from Long-Term Holders
On-chain analytics reveal a significant shift in holder behavior. Data from K33 Research indicates that since the start of 2023, a staggering 1.6 million Bitcoin—previously dormant for at least two years—have been moved, representing approximately $140 billion in value. Furthermore, nearly $300 billion worth of BTC has re-entered circulation in 2025 alone. According to CryptoQuant, selling activity from these long-term holders over the past 30 days has reached its highest level in more than five years.
This selling has been particularly evident during U.S. trading hours. Repeated attempts by buyers to push past $89,000 have been thwarted by fresh waves of selling. A brief rally to $88,000 on Friday, following the Bank of Japan’s decision to raise its key interest rate to a 30-year high, quickly lost momentum. The recovery from a low of $85,200 proved short-lived, continuing the pattern of recent days.
Derivatives Signal Divergence
The derivatives market, however, tells a more bullish story. On Friday, open interest rose faster than the spot price, suggesting the recovery was primarily fueled by leveraged long positions. The funding rate climbed to 0.085%, its highest level since November 21. A positive funding rate, where longs pay fees to shorts, typically indicates bullish sentiment. This is supported by a long-short ratio showing 66% of positions are long.
Should investors sell immediately? Or is it worth buying Bitcoin?
This optimism has not spread to altcoins. For assets like Solana and XRP, open interest declined by 4.4% and 2.6%, respectively, despite minimal price movement—a sign that speculators may be retreating from altcoin exposures.
Analyst Targets Remain Lofty Amid Caution
In spite of the current slump, institutional forecasts remain ambitious. Citigroup has maintained a 12-month price target of $143,000 for Bitcoin, roughly 62% above current levels. Their analysts cite potential U.S. regulatory clarity in Q2 2026, a revival in ETF demand, and positive equity markets as key catalysts. They identify $70,000 as a critical support level, with a bearish global recession scenario potentially driving Bitcoin down to $78,500. A bullish case could see prices reaching $189,000.
CF Benchmarks presents an even more optimistic long-term view. Their probabilistic model projects a Bitcoin price of $1.42 million by 2035, based on the assumption that BTC could capture about 33% of gold’s market capitalization.
Regulatory Progress Meets Political Uncertainty
The regulatory landscape saw significant advances in 2025 under the Trump administration. The SEC dropped its lawsuits against Coinbase and Binance, a stablecoin bill was passed, and banks received clearer guidelines for handling crypto assets. The announcement of a strategic Bitcoin reserve also marked a milestone.
However, momentum has stalled. Comprehensive market structure legislation is now bogged down in the Senate, with debates centering on anti-money laundering rules and requirements for decentralized finance platforms. Compounding this uncertainty, Senator Cynthia Lummis—a leading crypto advocate in Congress—has announced her retirement for next year, representing a potential setback for the industry.
A Critical Juncture
Bitcoin now finds itself at a crossroads. While support above $85,000 has held so far, persistent distribution by long-term holders and repeated failures at the $89,000 resistance level warrant caution. The market appears to be undergoing a transformation, evolving from a highly volatile speculative instrument toward an institutionally-backed asset with tighter correlations to traditional finance. The coming weeks will reveal whether recent regulatory strides and a improved macroeconomic climate can propel Bitcoin back onto a growth trajectory.
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