Bitcoin's Christmas disappointment: over 30% drop since October and loss of the "holiday rally"

The end of the year brought disappointing results for the largest cryptocurrency. From the peak reached in October, Bitcoin lost nearly one-third of its value, marking the worst quarterly performance since Q2 2022 – the period when the market was hit by a wave of bankruptcies (collapse of TerraUSD and Three Arrows Capital).

While traditional financial markets are experiencing a typical year-end rally, Bitcoin not only missed the chance for the so-called “holiday rally,” but also experienced extraordinary technical turbulence. On Wednesday evening, a rare flash crash occurred on one of the major trading platforms on a pair with a new stablecoin – the price suddenly dropped from around $87,600 to $24,100 (a decline of over 70%), only to return within seconds to levels of $87,000. This event illustrates the scale of shocks affecting the market, although volatility was limited solely to this particular trading pair.

Current Bitcoin quotes hover around $92,870 (according to the latest data), remaining in turbulence both technically and fundamentally. This year’s decline has already exceeded 11%, contrasting sharply with the over 70% gains in tech stocks and gold, which are recording increases this year.

Flash crash: insufficient liquidity as a catalyst

Market experts point out that such sudden drops usually result from a lack of sufficient liquidity or technical flaws in new trading pairs. Less liquid stablecoins lack enough market makers, leading to a shallow order book and vulnerability to large, single sell orders.

Large market orders, forced liquidations, or algorithmic trading can quickly surpass available supply, causing a temporary disconnect between the price and actual market levels. During periods of low trading activity, this effect is especially noticeable – fewer market participants mean less capacity to absorb order flows.

Analysts warn of the risks associated with operations on new and illiquid pairs, especially when the ecosystem is still developing. In conditions of geopolitical uncertainty and variable market liquidity, such phenomena serve as clear warnings for high-leverage traders.

Lack of buyers and divergence from traditional markets

While American stocks are hitting record highs (S&P 500 closed on December 24 at a historic peak of 6921 points), and gold reaches new highs (above $4,500 per ounce with an annual increase close to 70%), Bitcoin remains in consolidation without a clear upward impulse.

Historical data shows that Bitcoin’s performance during the holiday period is unstable – in 2011 and 2016, it recorded increases of 33% and 46%, while in 2014 and 2021, declines of 14% and 10%. Since 2011, the average holiday increase has been just 7.9%.

A deep reason for this weakness is the lack of decisive buyers entering the market. Selling pressure is maintained by long-term holders taking profits, and Bitcoin has lost its reputation as “digital gold” – defensive flows directed toward traditional safe assets bypass cryptocurrencies.

Technical pressure and fund withdrawals

Bitcoin has fallen below the key 365-day moving average at around $102,000, which served as support in the current cycle. Failing to rebound above this level increases the risk of a deeper correction.

Outflows from spot investment funds are accelerating the weakening. On Wednesday, a net outflow of approximately $175 million was observed from Bitcoin ETFs and $57 million from Ethereum instruments. Historical outflows from certain major products have already exceeded $5 billion, reflecting large-scale profit-taking.

These outflows represent a typical year-end pattern – risk reduction, realization of gains/losses for tax reasons, and shifting to more defensive positions. At the end of December, traders usually reduce exposure to volatile assets, waiting for clear signals from the new year.

End of euphoria

While stocks rise, gold shines, and the traditional market sends bullish signals, Bitcoin’s stagnation sends a completely different message. An asset built on excitement and speculative sentiment shows no signs of enthusiasm as the year comes to a close.

Analysts suggest that most selling pressure may be exhausted, potentially forming a base for a rebound in 2026. However, for now, Bitcoin remains trapped in consolidation, waiting for a new impulse – whether from macroeconomic perspectives or from the influx of new capital.