Year-End Liquidity Squeeze Keeps Bitcoin Capped Despite Rising Demand and Fed Cut Bets

Bitcoin (BTC) is entering the final trading days of 2025 stuck between improving demand signals and a market structure that limits upside. Prices have remained range-bound in the high-$80,000 area as thin holiday liquidity and year-end positioning mute the impact of shifting sentiment.

At these levels, Bitcoin is trading near the average cost basis of U.S. spot ETF holders, creating a key pressure zone. On-chain data shows neither panic selling nor strong inflows, pointing instead to consolidation as traders wait for a clearer catalyst in low-liquidity conditions.

Bitcoin ETF Breakeven Levels Shape Short-Term Risk

A large share of ETF-linked capital is now sitting near breakeven, making price behavior around this zone especially sensitive. Analysts note that a clean break below the $88,000 area could encourage more defensive positioning, particularly if thin holiday trading amplifies volatility.

On the upside, reclaiming and holding levels above $90,000 would suggest that overhead supply from flat or nervous holders is finally being absorbed.

Despite muted price action, buying interest has not disappeared. Exchange outflows and whale accumulation have picked up in recent days, indicating that some investors are using the range to build positions rather than exit them.

Futures data, meanwhile, shows a gradual reduction in leverage instead of forced liquidations, pointing to controlled risk management rather than stress. Gold’s Strength Highlights Risk Rotation

While Bitcoin remains range-bound, gold has pushed to fresh all-time highs, underscoring a clear preference for traditional safe havens.

The divergence reflects a market still focused on capital preservation as uncertainty around growth and inflation lingers. Expectations for further rate cuts by the Federal Reserve in 2026 have supported broader risk sentiment, but the impact on crypto has so far been limited by positioning and timing.

Historically, Bitcoin has often lagged major moves in gold, reacting later once liquidity improves and risk appetite returns. For now, that pattern appears intact. With economic data releases light but closely watched, traders are approaching year-end cautiously.

Until liquidity returns in early 2026, Bitcoin may remain capped, even as underlying demand quietly builds beneath the surface.

Cover image from ChatGPT, BTCUSD chart from Tradingview