Bitcoin rises to 90K before crashing: the Santa Rally remains just a dream

Dark week for Bitcoin and the crypto markets. While many hoped for a festive end-of-year rally, current data tell a very different story: massive liquidations, ETF outflows, and a market sentiment that continues to deteriorate.

The rebound that didn’t hold

Bitcoin briefly reached $90,000 on Wednesday morning, a level that seemed to promise the long-awaited Christmas rally. But hope was short-lived. The leading cryptocurrency experienced a sharp retreat, falling to $85,373 due to a massive wave of liquidations in the derivatives market. According to CoinGlass, $155 million worth of Bitcoin contracts were liquidated in just 24 hours.

At the time of writing, BTC is trading at 89.61K with a 3.62% decline in the last 24 hours, according to CoinGecko data. Volatility remains extreme, with the price swinging thousands of dollars within a few hours.

Market sentiment darkens drastically

On Myriad, the prediction market platform, the odds of Bitcoin reaching $100,000 before the end of the year have plummeted. Just 24 hours ago, traders assigned a 68-69% probability to this event. Today, that same probability has dropped to 57%, signaling a clear shift in market operator sentiment.

Even more significant is the collapse of expectations for the Santa Rally: the chances of a Christmas rally occurring have fallen below 4%, almost an impossible scenario according to market participants.

Ethereum follows the decline, leading losses

Ethereum is also not immune to volatility. ETH has fallen 6.77% in the last 24 hours, currently trading at $3,000. Over the week, losses have further amplified: Ethereum is down 5.68% over seven days, leading losses among the top crypto assets by market cap.

Negative fundamentals: outflows and unemployment fears

The macroeconomic context continues to weigh on prices. Bitcoin ETFs have recorded cumulative outflows of $634 million just this week, according to Farside Investors. This capital drain from traditional funds signals a loss of confidence among institutional investors.

The unemployment data released by the U.S. Bureau of Labor Statistics further worsened the picture, showing deteriorating employment—the highest level since 2021. This accelerated sell-offs on Bitcoin and Ethereum just as markets were attempting a rebound.

The threat of the Bank of Japan

Meanwhile, traders are preparing for a potential rate hike by the Bank of Japan scheduled for Friday. If realized, it could reverse the profitable “carry trade” on the yen, one of the main drivers of global liquidity that has historically fueled rallies in high-risk assets like Bitcoin.

Matt Hougan, Chief Investment Officer of Bitwise, stated that the rate increase might not create extraordinary volatility, as it is widely anticipated by the market. However, he warned that in the current context, the magnitude of such a rate hike (i Japanese rates at three-decade highs) could still exert short-term downward pressure as investors digest this news.

The outlook remains complex: Bitcoin has shown it can jump toward 90K, but the fragility of the recovery and the convergence of negative factors continue to pose a significant obstacle to achieving year-end bullish targets.