As 2025 draws to a close, Bitcoin is experiencing a turbulent period characterized by conflicting pressures. A combination of tax-related selling, waning interest from major holders, and mounting stress within the mining industry is weighing on the cryptocurrency’s price. However, underlying blockchain data suggests that such periods of strain have historically often preceded market bottoms. This presents a puzzle for investors: how should one interpret the clash between immediate weakness and these longer-term constructive signals?

Institutional Flows and Policy Developments

The institutional landscape presents a mixed picture as the year ends. Major exchange-traded products, including BlackRock’s IBIT, have seen net outflows in recent weeks, pointing to tighter overall liquidity conditions. Yet, targeted accumulation continues elsewhere.

• State-Level Adoption: A notable development came from the U.S. state of Texas, which in late November allocated approximately $5 million from budget surpluses to purchase the IBIT ETF, with Bitcoin trading above $90,000. This marks the beginning of a formal state-level Bitcoin reserve strategy.
• Corporate Treasury Activity: Despite the market correction, corporate treasuries (excluding Strategy, formerly MicroStrategy) added roughly 42,000 BTC to their holdings between mid-November and mid-December. Total corporate Bitcoin reserves now exceed 1 million BTC.
• International Recognition: On the sovereign front, the International Monetary Fund (IMF) recently commended El Salvador’s economic progress. Discussions regarding a potential sale or restructuring of the state-backed Chivo wallet are reportedly well advanced.

These movements indicate that, beneath the daily price volatility, structural holders and new forms of institutional demand continue to establish themselves, even if their actions are not synchronized with short-term market trends.

Technical Pressure and Immediate Catalysts

Bitcoin is currently trading near $87,085, significantly below its 52-week high of approximately $124,000 and only modestly above its annual low. The price sits about 6% below its 50-day moving average, while a Relative Strength Index (RSI) reading around 38 indicates a weakened but not yet severely oversold market.

From a chart perspective, the asset has become entrenched below a key resistance zone near $88,000. Having broken below a long-term upward trend channel roughly six weeks ago, Bitcoin has since moved within a relatively narrow range with little momentum. Implied volatility remains elevated, with the annualized 30-day volatility standing above 34%.

Several near-term factors are exacerbating the downward pressure:

Should investors sell immediately? Or is it worth buying Bitcoin?

• Year-End Tax Strategies: Investors frequently sell assets at a loss before year-end to realize tax benefits. This practice impacts not only Bitcoin directly but also crypto-correlated equities like Strategy and Coinbase. Notably, Strategy paused its Bitcoin purchases during the week of December 15-21, a move that further dampens market risk appetite.
• Significant Options Expiry: On December 26, Bitcoin options with a notional value of around $23.6 billion are set to expire. Such a large expiry can amplify price swings in the typically thin holiday liquidity as traders adjust or hedge their positions.
• Large Holder Distribution: On-chain metrics reveal that entities known as “whales” have been net sellers in 2025, offloading approximately 161,294 BTC (worth around $15 billion) over the course of the year. This removes a crucial pillar of demand from the market.

Mining Sector Shows Signs of Strain

Despite the weak price action, some analysts view current conditions in the mining sector as potentially constructive. A new analysis from VanEck indicates miners are entering a “capitulation” phase, characterized by the forced exit of less efficient operators.

Key observations include:

• Hash Rate Decline: The network’s computational power fell by about 4% in the month leading to mid-December—the most pronounced drop since April 2024. Part of this decline is linked to the shutdown of 1.3 gigawatts of capacity in Xinjiang, China.
• Historical Precedent: VanEck notes that periods of negative hash rate growth have frequently signaled buying opportunities in the past. Since 2014, 90-day returns following such phases have been positive roughly 65% of the time.
• Profitability Squeeze: Transaction fees have fallen to their lowest level since 2011, compressing total miner revenue. While modern rigs like the Antminer S19 XP can remain profitable with electricity costs around $0.077 per kWh, older setups are under severe pressure. Some miners are pivoting to other ventures, such as high-performance computing and AI, as illustrated by Cipher Mining’s recent acquisition in Ohio.

Market observers have often interpreted these consolidation phases, where well-capitalized miners gain market share from inefficient ones, as a cleansing process that can lay the groundwork for future recoveries.

Sentiment and Diverging 2026 Outlooks

Current sentiment indicators paint a clear picture of uncertainty. The Crypto Fear & Greed Index reads 24, firmly in “Extreme Fear” territory, which typically reflects high caution and reduced risk appetite.

Forecasts for 2026 vary widely among analysts:

• Bullish Case: Brokerage firm Bernstein maintains a possible price target of $150,000 for Bitcoin in 2026, citing robust structural demand and sustained institutional investor commitment despite the ongoing correction.
• Cautious View: VanEck anticipates a year of consolidation. Its analysts suggest that while the positive signal from miner capitulation is supportive, the mixed global liquidity environment favors a trading range over a powerful breakout.
• Correction Potential: Veteran market analyst Peter Brandt sees a potential downside target near $60,000 by the third quarter of 2026 if key support levels are breached.
• Structural Requirements: Jeff Park of ProCap emphasizes that achieving new all-time highs would require more than just ETF and retail demand. He believes additional structural buyers, such as nation-states or central banks, would be crucial.

As 2025 concludes, two narratives are colliding: short-term burdens like tax-loss harvesting, whale distributions, and options expiry on one side, and more constructive on-chain and structural signals on the other. The immediate test will be the options expiry on December 26, which, depending on market reaction, could lead to either a pronounced volatility shake-out or a meaningful relief rally.

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