Journalist
Posted:
Undoubtedly, the fourth quarter has developed into the weakest quarter of 2025.
The pullback has wiped out nearly 63% of the gains from the Q2-Q3 run, pushing many HODLers underwater.
Still, it’s still a week before the year ends and the market heads into a low-liquidity holiday season. This is important in terms of timing.
Bitcoin [BTC] Still trading 25% below its high of $126,000, but despite the ongoing FUD, its market dominance hasn’t really changed and is hovering around 60%. This indicates that capital remains parked rather than rotating away.
Source: TradingView (BTC.D/USDT)
In other words: that dominance indicates an underlying trust.
Under normal circumstances you would expect some rotation into altcoins. Instead of, dominance of altcoins (excluding the top 10) has compressed to just 6.73%, the lowest level in five years, reinforcing that risk appetite remains concentrated in Bitcoin.
That begs the real question: what happens if the macro FUD cools and the market reverses risk? With the “holiday season” upon us, will bulls step in and squeeze late shorts, triggering the textbook bear trap setup?
Will a Short Squeeze Cause Bitcoin’s Holiday Bounce?
The holidays couldn’t have come at a better time.
Technically, it’s been over a month since Bitcoin recovered $90,000, and of course: thick short liquidity cluster has risen just above that level as shorts have capitalized on the volatility.
Zooming in, there is over $5.8 billion in short positions with leverage around $95,000, making it an obvious target for bulls. Will they intervene? Bitcoin’s MVRV in particular is flashing ‘undervaluation’, which provides an additional incentive for a possible step.
Source: Coinglass
In short, the stage seems set for a textbook bear trap.
To support this, The technical aspects of Bitcoin reinforce the undervaluation. The RSI is hovering around 35, and BTC has dipped below $90,000 for six straight weeks, potentially causing the classic resistance-to-support flip.
From here, a breakout above this zone could hit short liquidity clusters, increasing upside pressure and potentially kicking off Bitcoin’s “holiday rally,” with $95,000 as a near-term resistance target.
Final thoughts
- Bitcoin dominance remains strong despite the fourth quarter pullback, indicating capital remains in place, while altcoin dominance is at a five-year low.
- The technicals indicate a possible bear trap setup, with $5.8 billion in short liquidity poised to fuel Bitcoin’s holiday rally.