As 2025 draws to a close, Bitcoin is navigating its final weeks with significant volatility. A complex picture is emerging, shaped by macroeconomic signals from Japan, record-breaking on-chain valuations, and a tense derivatives landscape. The core question facing investors is whether the current period of weakness is merely a technical correction or an early sign of more profound demand cooling.
The digital asset is currently trading near $88,155, approximately 29% below its October peak. Short-term pressure remains evident, with a decline of over 5% in the last 30 days. The price sits roughly 6.7% below its 50-day moving average, accompanied by a relatively weak Relative Strength Index (RSI) reading of 38.1.
On-Chain Foundations: A Tale of Two Realities
Record Realized Capitalization Underpins the Market
One key pillar of stability is the realized market cap, a valuation metric that weights each Bitcoin transaction at its last transacted price. This figure has reached an all-time high of approximately $1.125 trillion. Notably, it has continued to climb despite a price correction exceeding 30% since October. This trend suggests fresh capital has entered the ecosystem, with many coins changing hands at higher price levels.
This underlying on-chain structure points to a fundamentally intact bull market backdrop, even as the spot price has struggled for weeks. In essence, the foundational capital base appears more robust than a superficial glance at the price chart might indicate.
Network Activity and Miner Revenues Show Strain
Conversely, network activity presents a more subdued picture. The 7-day average of active addresses has fallen to around 660,000—the lowest level since December 2024, when speculation surrounding Ordinals and Runes briefly drove a traffic surge. Network engagement has noticeably cooled since then.
This reduced on-chain usage directly impacts miner revenues. Their daily income has decreased from about $50 million in the third quarter to roughly $40 million. While not yet an acute earnings crisis, this puts pressure on mining margins, forcing operators to seek greater efficiency or consider consolidation.
Macro Catalysts and a Nervous Market Structure
Japan’s Pivot and a Tense Price Reaction
The recent upward move was triggered by the market’s surprisingly robust response to the Bank of Japan’s interest rate decision. Despite raising rates to their highest level in three decades—traditionally a signal for increased risk aversion—Bitcoin posted significant gains within hours. Nasdaq-100 futures also rose in parallel, while the Yen weakened. This suggests the rate hike was largely anticipated, prompting traders to add to long positions.
Data from the derivatives market indicates the movement was primarily fueled by leveraged long bets. The aggregate funding rate climbed to its highest level since late November, signaling that long traders are willing to pay premiums to short positions. This reflects a market that is optimistically positioned in the near term but remains vulnerable, where any setback could trigger a chain reaction of liquidations.
Volatility persists at elevated levels. This week saw intraday swings in market capitalization amounting to billions, followed by forced liquidations on both sides of the market. The annualized 30-day volatility reading of nearly 38% fits this image of a turbulent, yet not panic-driven, environment.
Overhead Supply and a Burdensome Derivatives Overhang
Significant Resistance Looms Above
A major headwind is the substantial “overhead supply.” Dense clusters of sell-side interest exist between $93,000 and $120,000, where many participants entered the market and now await exit opportunities. This supply wall currently acts as a ceiling for any recovery rallies.
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The amount of coins held at a loss has risen to 6.7 million BTC, the highest level this cycle. This means roughly 23.7% of the circulating supply is “underwater,” comprising 10.2% held by long-term investors and 13.5% by short-term holders. This creates an environment where any strong upward move carries the potential for profit-taking and the closing of loss-making positions, making it harder to establish sustained trending action.
$23 Billion Options Expiry Adds to Tension
The derivatives market amplifies this pressure. On December 26, 2025, options contracts with a notional value of approximately $23 billion are set to expire—more than half of the total open interest on the Deribit platform. Positioning is clearly defensive, with a heavy concentration of put options around the $85,000 strike price. This level could act as a magnetic zone for the spot price in the lead-up to expiry.
Market observers, including Nick Forster of Derive.xyz, note that 30-day volatility is moving back toward 45%, while options skews remain around -5% for both short and longer terms. This signals the market is pricing in further downside risk for the first half of 2026, valuing protection against declines more highly than opportunities for sudden rallies.
Institutional Flows and Capital Rotation Trends
Strategy Maintains Aggressive Accumulation
On the corporate front, Strategy (formerly MicroStrategy) continues to be a significant buyer. Between December 8 and 14, the company purchased Bitcoin worth approximately $980.3 million. Strategy’s total holdings now stand at 671,268 BTC, acquired at an average price of around $74,972 per coin—a total investment of just over $50.3 billion.
CEO Michael Saylor interprets the market’s relatively muted reaction to these large purchases as a sign of Bitcoin’s growing maturity. He emphasizes that a truly resilient “digital capital network” should not be swayed by individual actors. Long-term, he projects annual value appreciation of about 30% over the next two decades—an ambitious assumption that underscores the perceived strength of institutional commitment.
Altcoins Struggle for Traction
Meanwhile, CoinMarketCap’s “Altcoin Season” indicator, with a reading of 14 out of 100, signals clear Bitcoin dominance in the current cycle. Capital rotation into smaller cryptocurrencies is at its weakest point in some time. While Ethereum has shown periods of relative strength and marginally outperformed Bitcoin on Friday morning, its ETH/BTC ratio trended downward over the week. The market remains far from a broad-based altcoin rally.
Critical Levels and the Path Forward
On-chain analysis suggests a massive support band exists between $80,000 and $83,000. This zone converges three key cost levels:
* The True Market Mean near $81,000
* The average acquisition price for U.S. spot ETFs at approximately $83,844
* The 2024 volume-weighted average price near $83,000
This area has historically served as structural support during pullbacks and will likely prove decisive in the coming days, especially around the options expiry. On the upside, the zones near $93,000 and the short-term holder cost basis of approximately $101,500 represent key hurdles. Until these levels are reclaimed, the scope for a sustained upward move remains limited.
In summary, Bitcoin finds itself in a tense equilibrium. While its fundamental capital base appears sturdy, weaker network activity, substantial supply pressure above current prices, and overtly bearish derivatives signals create near-term headwinds. The options expiry on December 26th is poised to be a critical test of whether the market can defend the $80,000 to $83,000 support zone, thereby laying the groundwork for a more stable position as 2026 begins.
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