Market Movement:

  • Ethereum remains near $3,000, with a recent flat trading pattern despite forming a potential inverse head-and-shoulders breakout structure.
  • Bitcoin’s technical pattern shows support between $84,500 and $85,000, with potential targets at $90,500 and $94,200 if support holds.

Key Events:

  • US federal government’s interest payments on national debt surpassed $1 trillion for the first time in fiscal year 2025, with total interest expenditure reaching $970 billion, nearly tripling since 2020.
  • ETF data indicates $31 billion in combined flows to Bitcoin and Ethereum ETFs in 2025, reflecting strong institutional demand.
  • VanEck’s 2026 outlook predicts Bitcoin will recover from its current lag, with expectations of a rally in 2026 despite a slowdown in 2025.

Trading Signals:

  • Bitcoin’s open interest dropped by $3 billion for futures and Ethereum’s by $2 billion overnight, indicating reduced leverage and cautious trading.
  • Institutional flows show consistent buying support since summer, with retail traders rotating out of altcoins into Bitcoin and Ethereum amid choppy market conditions.

Narrative Shifts:

  • Bitcoin dominance continues to rise, with altcoins under heavy supply pressure and a token unlock schedule that dampens altcoin rally prospects.
  • Market sentiment is in “fear” territory with the Crypto Fear and Greed Index at 29, and altcoin season index at 17, indicating a risk-off environment.
  • Galaxy Research notes Bitcoin’s real inflation-adjusted peak remains below $100,000, reinforcing the narrative of dollar debasement and inflationary pressures.

Risk Alerts:

  • Market volatility remains high with choppy price action, small candlestick bodies, and spinning tops indicating indecision.
  • Regulatory risks persist as institutional adoption accelerates, and the US debt crisis signals macroeconomic instability.
  • The downward channel pattern suggests potential for further downside if support at $84,500 fails, with a critical pivot at $90,000.

Opportunities:

  • Potential for a strong 2026 rebound in Bitcoin, as predicted by VanEck, with targets above $100,000 in inflation-adjusted terms.
  • Ethereum’s forming breakout structure and collapsing long-term holder selling pressure suggest a possible upward move if key support holds.
  • The ongoing institutional demand and macroeconomic pressures create opportunities in stablecoins and traditional finance integration within crypto.

Flows & Positioning

Bitcoin Dominance Remains Strong Amid ETF Flows

In 2025, Bitcoin's dominance in the cryptocurrency market remained robust, with substantial institutional demand reflected in the $31 billion combined flows to Bitcoin and Ethereum ETFs. This indicates a strong preference for major assets as retail investors shifted focus back to Bitcoin and Ethereum, signaling a potential end to the anticipated altcoin season. Despite recent price fluctuations, Bitcoin's market value is approximately $1.75 trillion, with a circulating supply nearing its hard cap of 21 million coins. This consolidation phase is crucial as it suggests that institutional players are still favoring Bitcoin over altcoins, which are currently under heavy supply pressure.

Institutional ETF Activity Shows Mixed Signals

Recent data indicates that Bitcoin and Ethereum ETFs are experiencing persistent outflows, with Bitcoin ETFs recording $188.6 million in net outflows over four consecutive days. This trend suggests a weakening institutional appetite as market participants engage in year-end derisking. Conversely, XRP ETFs have seen inflows of $43.89 million, highlighting a divergence in institutional interest within the crypto space. The cumulative net inflows for XRP spot ETFs have surpassed $1.12 billion since their launch, indicating strong institutional support despite declining social sentiment.

Price Levels and Market Dynamics

Bitcoin is currently trading around $87,450, having slipped 1.2% over the past 24 hours. The price remains trapped in a downward channel, with key support levels identified between $85,000 and $90,000. A breakout above $90,500 could signal a bullish reversal, while sustained pressure below $84,500 may indicate further declines. Additionally, the options market is influencing Bitcoin's price stability, with a significant $24 billion options trap set to expire soon.

This could lead to increased volatility as market makers adjust their positions, potentially triggering a breakout or breakdown in the near term.

Market Outlook and Future Trends

The current market dynamics suggest a cautious outlook for Bitcoin as institutional flows fluctuate. While some investors are cashing out, others are accumulating, indicating a split sentiment among market participants. The recent surge in gold prices, reaching over $4,500 per ounce, may also impact crypto investments as investors seek safe-haven assets. As we approach 2026, the potential for Bitcoin to reclaim higher price levels remains contingent on macroeconomic factors and institutional engagement.

Analysts remain optimistic about Bitcoin's long-term prospects, especially if liquidity conditions improve and market sentiment shifts positively.

Macro & Policy

BlackRock Expands Digital Assets Team Amid Growing Crypto Interest

BlackRock is actively expanding its digital assets team, with new roles being posted in New York, London, and Singapore. This recruitment drive includes positions ranging from associate to senior leadership roles, focusing on product strategy, research, fund services, and compliance. Notably, a managing director role in New York offers a salary range of $270,000 to $350,000, emphasizing the firm's commitment to enhancing its crypto initiatives, including tokenization and stablecoins.

Spain to Fully Implement MiCA Regulations and DAC8 Directive by 2026

Spain is set to fully implement the Markets in Crypto-Assets Regulation (MiCA) by July 2026, following its initial adoption plans unveiled in 2023. This regulation will standardize the issuance and marketing of cryptocurrencies, categorizing them into utility tokens, security tokens, and stablecoins. Additionally, the DAC8 directive will require crypto exchanges to report user information starting January 1, 2026, enhancing transparency and regulatory oversight across EU member states.

Security & Incidents

SEC Charges $14 Million Crypto Investment Scam Targeting Social Media Users

The SEC charged three purported crypto trading platforms and four investment clubs with allegedly defrauding investors of over $14 million.

SEC Sounds Alarm as Crypto Scammers Flood Group Chats With AI-Powered Cons

Crypto scams are rapidly migrating into private group chats, where fraudsters pose as trusted experts, use AI-powered deception, and funnel retail investors toward fake trading platforms, prompting a fresh SEC warning about rising losses and evolving tactics.

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