According to a report by CoinDesk, as the year-end approaches, K33 research director Vetle Lunde believes that Bitcoin's (BTC) relatively weak price performance this season may actually benefit its January trend, as asset managers will rebalance their portfolios to maintain established asset allocation ratios.
Lunde pointed out that earlier this year, Bitcoin underperformed compared to the S&P 500 in the first quarter, but saw an increase at the start of the following quarter. Conversely, when Bitcoin outperformed the stock market in the second quarter, it experienced a drop at the beginning of the third quarter.
As of now in the fourth quarter, Bitcoin is lagging behind the S&P 500 by as much as 26%, indicating that the market may need to undergo a significant rebalancing.
Lunde then stated:
“Fund managers who have preset Bitcoin allocation targets may adjust their weights before the end of the year, which could bring additional capital inflows in the last few trading days of the year and early January.”
Cryptocurrency traders remain cautious
Lunde added that although prices have stabilized, market participants remain hesitant and are less willing to take on new risk positions. He pointed out that trading activity in derivatives on the Chicago Mercantile Exchange (CME) is still close to yearly lows, with Bitcoin futures open interest hovering around 124,000 BTC.
In the perpetual contract market, the funding rate has generally remained close to neutral levels, with open interest showing little change, indicating a lack of clear directional bets in the short term.
The trading volume in the spot cryptocurrency market is also decreasing, with a 12% drop in volume last week. This also confirms that as the end of the year approaches, many traders are still unwilling to actively enter the market.
Source
