As Bitcoin trades near $88,800 this Sunday, a stark divergence in market behavior is unfolding. The world’s leading cryptocurrency now sits approximately 30% below its October peak of $126,000. This correction has pushed the widely watched Fear & Greed Index into “Extreme Fear” territory, registering a score of 20. Beneath this surface of retail panic, however, a powerful counter-trend is emerging: aggressive accumulation by sovereign and corporate entities.
A Tepid Fed Response Fails to Ignite Rally
Markets had largely anticipated the Federal Reserve’s mid-December decision to cut its benchmark interest rate by 25 basis points. Consequently, the announcement triggered a classic “sell-the-news” reaction rather than providing upward momentum. Analysts point to the Fed’s signaling of a slower-than-hoped pace for monetary easing through 2026 as the key catalyst. The absence of fresh liquidity prospects placed pressure on risk assets, including Bitcoin.
Since the FOMC meeting concluded on December 10th, BTC has shed roughly 7% of its value. Trading volumes have remained subdued, indicating a wait-and-see approach among a significant portion of market participants.
Strategic Buyers Seize the Downturn
Contrasting the gloomy sentiment, major institutional and governmental players are actively expanding their exposure.
MicroStrategy: The business intelligence firm, led by Michael Saylor, reported holdings of 671,268 Bitcoin as of mid-December. This staggering position represents over 3% of the entire circulating supply. The company has continued its purchasing strategy unabated despite the price decline.
State of Texas: In a landmark move this week, the US state officially allocated $5 million to Bitcoin. This investment marks the first tranche of a planned strategic reserve, making Texas the first American state to directly add BTC to its balance sheet.
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United Kingdom: Early December saw the Property (Digital Assets etc) Act come into force. This legislation formally recognizes cryptocurrencies like Bitcoin as personal property under British law, establishing clear rules for inheritance, bankruptcy, and legal disputes. The measure is designed to provide institutional investors with greater regulatory certainty.
On-Chain Metrics Signal a Transfer of Wealth
Blockchain data reveals a classic pattern of redistribution during corrections. Short-term holders are currently selling at a loss, while long-term addresses are accumulating. The Spent Output Profit Ratio (SOPR) for short-term holders has fallen below 1.0, a metric often associated with local price bottoms.
Simultaneously, wallets holding more than 1,000 BTC have recorded net inflows for the past two consecutive weeks. This activity suggests that large-scale investors are using the market weakness as a buying opportunity.
Key Technical Levels Under Scrutiny
Price action is currently hovering just above the $88,000 support zone. A sustained break below this level could see analysts shift their focus to the $82,000 mark as the next significant area of potential support. Historically, however, readings near 20 on the Fear & Greed Index have frequently coincided with advantageous entry points for contrarian buyers.
As 2025 draws to a close, the market narrative is split: weaker hands are exiting, while some of the world’s most substantial balance sheets are choosing to buy the dip.
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