While most people are still fantasizing about a year-end surge, I see the systemic turning point caused by the withdrawal of gray market funds.
Today is December 18, 2025, with only 13 trading days left until the end of the year. Ethereum is struggling around $2830, with a 24-hour decline of over 4%, and panic in the market is spreading.
Many people expect the main force to pull up at the end of the year, drawing a beautiful annual line. But my view is very clear: not only will there be no surge before the end of the year, but it may continue to decline, and this is just the beginning of a larger bear market.
1. The Cruel Truth Behind the Annual Line: Why is the Closing Price in December So Important?
The annual line is not just a K-line on the chart; it determines the market rhythm for the next year or even several years.
If this month ends at a high (like many people expect at $100,000), then according to the annual line volatility rule, Bitcoin's target for next year will point to $130,000 or even higher, which completely contradicts my judgment of a bear market.
The key question now is: where the annual line closes determines the overall trend for 2026.
Learn from history; the annual line crash in 2018 laid the foundation for the bottom oscillation in 2019; the annual line closing in the red in 2022 indicated a long-term bottoming out in 2023. And now, if the annual line for 2025 closes low, it will lay the foundation for the bear market in 2026.
Look at the current actual data: Ethereum has fallen over 30% from its high at the beginning of the year, and since December, net outflows have exceeded $2.2 billion, the most severe continuous bloodletting since the ETF was launched. Institutions are withdrawing, not entering.
Second, my core reason for being bearish: gray market funds are withdrawing on a large scale.
This is the core of this article and the sensitive fact that most analysts avoid discussing.
The U.S. seized $15 billion in cryptocurrency assets from Chen Zhi, sending a clear signal to all those engaging in gray market transactions with cryptocurrency: this market is no longer safe. If you engage in certain sensitive transactions, will you continue to keep a large amount of assets stored on-chain for a long time?
The answer is clearly no. The withdrawal of gray market funds is not a one-time event but a continuous process.
The characteristics of these funds determine that they must: withdraw in a decentralized, fast, and untraceable manner. This explains why the market experiences silent but persistent selling pressure.
Over the past two months, the number of Bitcoins held by long-term holders (those holding for at least two years) has decreased by about 1.6 million, worth about $140 billion. This is by no means a normal adjustment but a structural change.
The possible change path for gray market funds is: cryptocurrency → stablecoins → offshore assets or other value storage methods. This means that the time cryptocurrency stays as an 'intermediate link' is significantly shortened, permanently reducing buying support.
Third, technical and funding aspects corroborate: the decline is just a matter of time.
Look at today's market: Ethereum shows no resistance around $2850, with key support levels being lost one after another. Each rebound has become a selling opportunity, and bulls cannot organize an effective counterattack.
The outflow of funds from Ethereum ETFs continues to expand, with a single-day net outflow of $224.2 million on December 16 alone. This is not ordinary retail behavior but a collective choice of institutions and large funds.
On-chain, the supply of ETH on exchanges is indeed declining, but this is more about fund withdrawal rather than bullish accumulation. The ETH transferred to private wallets is likely being liquidated through over-the-counter channels.
From a technical perspective, daily and weekly levels have formed a bearish arrangement. Once the key support zone of $2880-2900 is effectively broken, the next target will directly point to $2750, or even the $2500 area.
Fourth, future market projection: the bear market has just begun.
Based on the above judgments, my projection for future trends is as follows:
December 2025 - January 2026: Continue to oscillate downwards, testing the Ethereum range of $2750-2500. There will be technical rebounds during this period, but they are all short-selling opportunities rather than reversal signals.
First quarter of 2026: The rebound height will be limited, and Bitcoin may encounter strong resistance near $100,000, then start a new round of decline. This will be the last escape opportunity for most people.
Throughout 2026: A downward oscillation trend is established, and cryptocurrencies enter a long winter. There will be rebounds during this period, but each rebound's peak will be lower than the previous high.
Behind this trend is a fundamental shift in market logic: from speculation-driven to value-driven, from gray market-driven to compliance-driven. During this transition, most premiums will be squeezed out.
Five, how should we as traders respond?
First, give up the fantasy of catching the bottom. In a downward trend, catching falling knives is the most dangerous behavior. The true bottom is not guessed but walked out.
Secondly, position management is superior to everything. When the trend is clearly downward, holding a light or empty position is the best strategy. Preserve your strength and wait for the true bottom to appear.
Finally, focus on liquidity rather than price. When the market experiences extreme panic and trading volume shrinks to the extreme, that is when we begin to pay attention. Clearly, now is not the time.
When most people are still fantasizing about a bull market, smart money has already begun to exit. This decline triggered by the withdrawal of gray market funds will not end in a short time. What we need to do is not to be blindly optimistic, but to calmly face reality.
Do you think my view is overly pessimistic? Feel free to leave your opinion in the comments. But please speak with data and analysis, not just empty proclamations.
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