The ongoing cycle reaches a major turning point.
From a technical perspective, the market has been moving sideways for weeks. Meanwhile, liquidity in all derivatives has increased, meaning any aggressive move in any direction could trigger a sharp, volatile swing.
Bitcoin [BTC] is clearly at the forefront of this approach. So far, BTC has been hovering around the $85k level for five weeks. Historically, these types of swings have tended to determine BTC’s next move, often sidelining late futures traders.
Source: TradingView (BTC/USDT)
Against this backdrop, Bitcoin’s recent flush is starting to matter.
For context, on December 26, BTC fell 2.22% to $86,000, wiping out nearly $3,000 in just 45 minutes as $70 million in long positions were liquidated. Of course, it looked like BTC had finally shown its hand.
And yet the market reaction remained limited.
Despite the decline, sentiment remained in the ‘fear zone’ total liquidations came in at just $189 million. Simply put: there was no widespread panic. This raises an important question: is the “conviction” in Bitcoin finally showing up?
Bitcoin’s action raises questions about HODLer confidence
Looking at on-chain data, it looks like the 2025 FUD was probably necessary.
A analyst noted that has liquidated approximately $154 billion worth of crypto holdings so far this year. That’s a huge shakeup, in line with BTC’s 6.34% annual dip – a sign that the market is clearly resetting positions.
The outcome? Bitcoin’s overheated derivatives have finally cooled down. In reality, Coin glass data highlighted that BTC’s Open Interest (OI) fell by approximately $40 billion in the fourth quarter alone. The same was valued at just $56 billion at the time of writing.
Source: Coinglass
Yet the belief does not seem to have been broken.
On the on-chain side, exchange data showed Bitcoin balances continuing to decline through 2025. More specifically, BTC held on exchanges has fallen by approximately 15% this year, with approximately 430,000 BTC withdrawn since April.
Against this backdrop, Bitcoin’s resilience does not seem random. Instead, the combination of declining currency balances and cooling derivatives has helped stabilize price action, limiting the risk of sudden swings.
In this context, Bitcoin’s recent volatility seems more in line with short-term macro pressures than with any real loss of conviction among long-term holders. This may lay the foundation for a bullish 2026.
Final thoughts
- Bitcoin’s sharp decline led to liquidations, but this movement remained limited. This indicates a leverage reset rather than panic selling.
- Cooling derivatives and falling exchange rates indicate steady longer-term holders’ conviction.