Bitcoin's recent price recovery appears to be built on shaky foundations, with derivatives data indicating the rally was primarily driven by short-covering rather than genuine new bullish demand. After surging nearly 15% from November 21 to December 9 and setting a local top around $94,200, BTC has since shed nearly 5%, trading around $89,860 as of December 15.
The market dynamic shifted during the recent rally, with a decline in open interest and stabilization in cumulative volume delta signaling short covering as the primary driver. This unwind of bearish bets is further evidenced by the 25-delta options skew improving from -11% to -5% over the same period, according to Deribit data. However, the lack of new demand remains concerning.
The market remains primed for volatility, with over $1.8 billion in leveraged shorts at risk of liquidation if Bitcoin reclaims $91,300, according to CoinGlass liquidation map data. A liquidation of these positions could trigger a short squeeze, potentially accelerating Bitcoin's rally if supported by increasing spot buyer demand—which has remained absent since the October 10 leverage washout.
Analytics firm Glassnode reports several indicators suggest a "mild bearish phase," characterized by minimal capital inflows being overshadowed by ongoing selling pressure from larger investors. Relative unrealized losses have skyrocketed to 4.4%, signaling a shift from optimism to heightened anxiety. The current $80K–$90K consolidation range is generating stress comparable to late January 2022.
Bitwise CIO Matthew Hougan expressed concern about continued risk from the October 10 leverage washout, suggesting "additional bodies will float to the surface." He also noted that "people have been selling, trying to get out in anticipation of the four-year cycle." Once these two forces are removed, Hougan expects crypto markets could move "substantially higher," but until then, price action could remain choppy heading into year-end.
Market activity is generally slowing as we approach the end of 2025, with Bitcoin oscillating within a tight range slightly under $90,000. Major trading firms are cutting back in preparation for the holidays, contributing to current stability and suggesting a wider period of consolidation. Since hitting its all-time high of nearly $126,000 in early October, Bitcoin has fallen nearly 30%.
Despite the cautious sentiment, some positive technical indicators are emerging. The hourly MACD is displaying increasing strength in positive territory, and the RSI has increased over 50. However, Bitcoin remains below the 100-hourly simple moving average, suggesting persistently gloomy sentiment. Key resistance levels are at $90,000, $90,500, and $90,650, with support at $88,550, $88,000, and $87,500.
