Bearish trading in bitcoin (BTC) markets continued Monday evening as the asset briefly fell below $92,000 due to profit-taking despite another mammoth MicroStrategy buy, recovering to just over $92,800 in Asian morning hours on Tuesday.
Some traders expect the current price trend will likely continue into February, weeks after President-elect Donald Trump takes office in the United States and sets in motion a flurry of policies that may help the market.
“We are skeptical of any New Year’s fireworks, especially with healthy financing,” traders at Singapore-based QCP Capital said in a Telegram broadcast. “January’s average returns (+3.3%) are relatively similar to December’s (+4.8%), and we could expect spot to remain in this range in the near term before things start to unravel.” improve from February onwards”.
“Options flows are also reflecting similar sentiments with initial vols lower and risk reversals on most Call bids in March, partly due to significant March Calls (120,000-130,000) bought last Friday,” they added. This means traders are betting that bitcoin prices will rise in March. They are buying more call options (which make a profit if the stock goes up) than put options. The cost of these options is falling, showing optimism for the March period.
BTC is on track to end December down 4%, the worst since 2021, as both retail investors and long-term holders withdraw their positions after a 117% year-over-year rise. Elsewhere, US Chicago PMI readings indicate an economic slowdown, adding pressure on the market that tends to be correlated with such data.
In what appears to have been its last purchase of the year, Bitcoin development company MicroStrategy increased its BTC stash for the eighth consecutive week on Monday, adding another 2,138 BTC for $209 million in the week ending December 29. 446,400 BTC.
But news of the purchase did little to stem the losses. BTC prices plummeted in the hours following MicroStrategy’s announcement, while the company’s shares fell 8% to their lowest level since early November.
The drop spread to major companies, with ether (ETH), XRP, Solana’s SOL, and Cardano’s ADA falling as much as 3% before recovering. BNB Chain’s BNB was little changed, while memecoins dogecoin (DOGE) and shiba inu (SHIB) fell 5%.
The broad CoinDesk 20 (CD20), an index that tracks the largest tokens by market capitalization, minus stablecoins, lost 2.7% in the last 24 hours.
Exchange-traded funds (ETFs) holding the asset recorded outflows of $420 million on their penultimate trading day before the new year, data shows. Fidelity’s FBTC lost $154 million to lead the outflows, followed by Grayscale’s GBTC at $130 million and BlackRock’s IBIT at $36 million.
Products have seen more than $1.5 billion in net outflows since Dec. 19, halting an impressive run in the first half of the month that saw nearly $2 billion in net inflows. Large capital outflows may reflect a shift in investor sentiment, possibly moving toward a more cautious or bearish outlook on bitcoin’s near-term performance.
