The crypto market is like a long haze, with both bulls and bears lost in this fog.
"It starts crashing the moment it hits 11 PM; this script has been playing out for several weeks now," a trader complained on social media. This regular crashing phenomenon has become the norm in the recent market and is even referred to as the '11 PM curse.'
Market liquidity has indeed dried up to a worrying extent. On-chain data shows that exchange Bitcoin reserves have decreased by about 8% since early August, with a total value dropping from $300 billion to $250 billion.
Even well-known bullish analyst Ban Mu Xia has announced 'surrender' and adopted a conservative strategy. The negotiations between El Salvador and the International Monetary Fund have also increased policy uncertainty, further exacerbating an already fragile market.
01 Market stalemate, volatility compressed to the extreme
Bitcoin is currently in a suffocating technical consolidation zone. On the 4-hour chart, the Bitcoin price has been hovering around $87,000 for several days, with resistance at $88,300 to $88,900 above, and support at the $86,000 to $84,000 range below.
This extremely compressed volatility signals that the market is about to experience a large-scale directional choice.
The futures open interest remains in the range of $55 billion to $60 billion, indicating that traders have not chosen to close their positions but are continuing to hold leveraged positions. This is like continuously applying pressure to a spring, and when the eventual breakout occurs, it could trigger a violent price movement.
From the market structure perspective, Bitcoin is still being suppressed by a clear downward trend line, which has been forming since the highs in October. Every subsequent rebound attempt has failed to break through this level, further solidifying its position as structural resistance rather than a temporary obstacle.
02 Liquidity drying up, the market has become 'water without a source'
By 2025, the total market capitalization of cryptocurrencies has shrunk by 20-30% compared to the peak at the beginning of the year, with Bitcoin's dominance around 55%. This increase in dominance usually indicates that the market is in a risk-off state, with investors shifting from high-risk assets to relatively safe Bitcoin.
But the problem is that even Bitcoin itself is facing a liquidity crisis.
The flow of funds in the spot market has shown a more conservative trend. On most trading days, outflows have consistently exceeded inflows, indicating that funds are continuously being distributed. Recently, a net outflow approaching $94 million further confirms weak spot demand.
What is more concerning is the explosive growth in the number of tokens. Over the past four years, most token issuance patterns have been low circulation, high FDV models. While the supply in the market is massive, capital is becoming increasingly cautious, insufficient to offset the large-scale unlocking tide of projects.
03 Bulls and bears intertwined, the market awaits a decisive catalyst
In the current market environment, the tug-of-war between bulls and bears has led to a stalemate in prices.
On the bullish side, states in the U.S. are eager to establish Bitcoin reserves. Meanwhile, the macro liquidity narrative continues to support Bitcoin's long-term rise. Arthur Hayes believes that the Federal Reserve's reserve management purchase program functions similarly to quantitative easing, and this liquidity support mechanism will ultimately drive Bitcoin to $200,000 by 2026.
However, bearish factors should not be ignored: Bitcoin's correlation with U.S. stocks has reached a historical high. Data shows that in 2025, the average correlation between Bitcoin and the S&P 500 index was 0.5, significantly higher than 0.29 in 2024. This increase in correlation means that Bitcoin is unlikely to move independently from traditional risk assets.
Additionally, Bitcoin critic Peter Schiff has once again issued a warning about a Bitcoin collapse. He pointed out that gold and silver prices have reached historical highs, indicating that funds are shifting to traditional safe-haven assets. Although this view may not be entirely accurate, it affects market sentiment.
04 Trump factor, the biggest variable in the 2025 market
All eyes are on the elected president, Trump. Analysts believe that Bitcoin may rise above $125,000 in the first quarter or fall to $77,000, with the key being whether Trump will fulfill his promises to the cryptocurrency industry shortly after taking office.
John Glover, Chief Investment Officer of the crypto lending platform Ledn, stated: 'If Trump does not take any action to fulfill his promises, especially in the first 100 days after taking office, Bitcoin may experience a pullback.'
This political sensitivity reflects the cryptocurrency market's high dependence on policy. Trump previously expressed support for establishing a national dollar Bitcoin reserve but has yet to detail any specific plans. This uncertainty is exactly what the market fears the most.
Historically, another key catalyst for Bitcoin in January could be the portfolio rebalancing of financial institutions. Hedge funds and asset managers typically choose to rebalance their portfolios in January to formulate their strategies for the year. This could bring new capital inflows to the market.
The next time you see a market crash at 11 PM, do not blindly follow the panic. Looking back at early October 2025, Bitcoin hit a historical peak of over $126,000 but plummeted more than 20% just days later. Those who sold in panic often missed the subsequent rebound opportunity.
True value investing often emerges in the most uncertain moments of the market. The fundamentals of Bitcoin have not disappeared; institutions are still quietly accumulating, and the global liquidity cycle continues to support its long-term value.
The market will never lack opportunities, only the eyes and patience to discover them.
Friends, how do you view the current market? Feel free to share your opinions and strategies in the comments and follow us as we navigate this challenging yet opportunity-filled cycle together.
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