Crypto markets opened the U.S. trading day with a modest rally, as Bitcoin (BTC) reclaimed the $89,000 level after dipping to $87,000 just a day earlier. However, open interest data suggests this upward move is likely driven by short-covering rather than the entry of fresh long positions.
Bitcoin’s performance during U.S. market hours marks a rare shift. Over the past month, the cryptocurrency has experienced an approximate 20% cumulative decline during American trading sessions, according to Velo data. Wednesday’s advance appears consistent with this pattern: Coinglass data shows BTC open interest fell from 514,000 to 511,000 since the U.S. market opened. The combination of rising prices and declining open interest points to traders closing short positions rather than adding new leveraged longs.
Meanwhile, crypto-related equities such as Coinbase (COIN), Robinhood (HOOD), and Circle (CRCL) saw little movement, mirroring the muted action in the S&P 500 and Nasdaq. Wintermute strategist Jasper de Mare attributed the subdued market to year-end de-risking, record ETF outflows, and thin holiday liquidity.
All three major crypto assets remain below critical systematic levels, with price action largely influenced by rollover flows and tax-related positioning, de Mare noted. Spot Bitcoin ETFs recorded $19.3 million in net outflows on Monday, marking the seventh consecutive day of redemptions. In mid-December, $1.29 billion exited Bitcoin funds, including a $157 million single-day outflow from BlackRock’s IBIT. Despite IBIT accumulating $25 billion in inflows year-to-date, December’s rotation appears tied to tax-loss harvesting. Altcoins, largely unaffected by IRS wash-sale rules, have not seen similar selling pressure.
On the derivatives front, over $27 billion in BTC and ETH options expired on Dec. 26, representing the largest single-day expiry in crypto history, according to Deribit. Funding rates and open interest, which peaked at $70 billion in June, have steadily declined as the year-end approaches.
BTC’s seven-day realized volatility dropped sharply through Dec. 25 but has recently started to rise, driven by erratic intraday swings. De Mare advised traders to exercise caution with short-dated signals until institutional flows return in early January.
