Bears had an early Christmas following Bitcoin’s 23% decline in the fourth quarter and are still aggressively positioning themselves for more year-end gains.
According to CryptoQuant, the level of Bitcoin Selling pressure has surpassed the dump in early 2025 during Trump’s tariff wars, as illustrated by a sharp decline in the Taker Buy Sell Ratio measure.
Source: CryptoQuant
Bitcoin [BTC] have short sellers regained dominance over the past five days as demand for ETFs continued to decline over the Christmas holidays and amid broader weak sentiment.
The institutional interest rate falls to the 2024 level
Since December 18, US Spot ETF products have recorded consecutive daily net outflows. This has been part of the broader decline in demand for ETFs since mid-October.
Open interest on the Chicago Mercantile Exchange also fell sharply. For the first time since September 2024, yields fell below $10 billion, signaling a clear shift in risk among institutional investors.
Source: Velo
The decline in institutional participation was largely due to the collapse of basic trading. This strategy involves buying spot ETFs and shorting an equivalent position on CME futures to earn returns.
That return peaked at almost 10% in early 2025. It has since fallen to around 5%, making the trade less attractive and riskier for hedge funds and other big players.
Limited demand for ETFs and the lack of a strong catalyst have led some analysts to do so projected a potential dip below $80,000 in early 2026.
However, the leveraged shorts could be quickly liquidated if BTC were to rise to $90,600. About $3 billion in leveraged shorts were parked at this level, with another immediate target of $88.7K in case of a liquidity chase.
Source: CoinGlass
On the other hand, long positions with leverage of $83.9K and $86.1K could also be liquidated during a volatile wick down.
Interestingly, Option players also gambled at similar levels. According to Arkham factsthe best Options volumes in the last 24 hours were concentrated at $85K for a potential dip and $88K and $90K for potential rally targets.
Source: Arkham
Overall, positioning focused on price action within a certain range in the new year, with major players actively hedging against downside risk back to $85,000.
Final thoughts
- Bitcoin short sellers have found themselves in year-end positions eyeing another potential drop to $85,000.
- Institutional demand for BTC has declined, with CME Open Interest falling to 2024 levels.