Bitcoin may be slipping into a classic year‑end setup: not a guaranteed Santa rally, but a “bullish, not overheated” configuration that traders often favor going into December’s final weeks. That’s the read from CryptoQuant analyst Axel Adler Jr., who tweeted and expanded on it in a Substack post Monday. Adler says BTC’s composite Regime Score is sitting in a sweet spot — optimistic enough to historically precede gains, but not so euphoric that it typically marks a local top. “BTC is entering a window for a Santa rally: the Regime Score is bullish but not overheated. Short liquidations are reinforcing the asymmetry in favor of buyers,” he wrote. What is the Regime Score? Adler calls it a composite indicator that blends taker imbalance, open interest pressure, funding, ETF flows, exchange flows and price trend into a single −100 to +100 scale. The exact number matters less than the band it occupies. Right now the score sits at +16.3 — inside the upper part of the neutral zone (+15 to +30). Backtests for 2025 show that subzone historically produced average returns of +3.8% over 30 days, whereas lower subzones (for example −15 to 0) showed negative expected returns (−1.5% over 7 days). Timing also matters: Adler notes the Regime Score just recovered from a brief bearish phase, dropping as low as −27 only a week ago before rebounding to +16.3. That speed of shift is a detail traders watch closely — the market’s momentum can flip quickly. Curiously, Adler’s backtest finds the most overtly “bullish” band (+30 and above) tends to mark local tops rather than sustained upside: transitions into the formal Bull regime historically coincided with short-term drawdowns (average −3.3% over 7 days). His tactical takeaway: the +15–30 band may be the optimal spot for taking on short‑term risk, while piling in after a break above +30 carries elevated risk of buying a near-term peak. Derivatives flow is reinforcing the case. Adler’s liquidation dominance oscillator recently dropped into negative territory (−11%), while its 30‑day moving average remains positive (+10%). He reads that divergence as evidence of a recent surge in forced short liquidations — mechanically bullish because short covers are buys. Long Liquidation Dominance is at 44% (below the 50% baseline), further confirming more shorts are being wiped than longs. Put together, Adler argues the market has both a historically friendly regime and fresh tactical fuel from short squeezes: “The predominance of short liquidations creates tactical fuel for upside,” he wrote, reinforcing the Regime Score’s positive signal. He’s also clear about what would invalidate the setup: a return of the Regime Score below zero combined with a flip in the liquidation oscillator back into positive territory (i.e., rising long liquidations). In plain terms, if longs start getting punished more than shorts, the asymmetry that’s currently favoring buyers would flip. For now Adler labels the market “bullish neutrality” — not a melt‑up, not a local top, but a window where positioning and derivatives dynamics make a year‑end drift higher more likely than not. At press time, Bitcoin traded at $89,864. Read more AI-generated news on: undefined/news

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