After an active trading session earlier in the day, Bitcoin (BTC) has largely stabilized around the $87,500 level, holding a gain of roughly 2% over the past 24 hours. Major altcoins, including Ether (ETH), XRP, and Solana (SOL), have posted similar modest gains, signaling a broadly constructive but cautious crypto market tone.
Crypto-related equities have also rebounded following a sharp sell-off earlier in the week. Strategy (MSTR) is up approximately 3%, Circle has surged nearly 10%, while Coinbase (COIN) has added about 1%. The recovery reflects improving short-term sentiment, even as investors remain selective and risk-aware.
“Clients are cautiously optimistic,” said Josh Barkhoarder, Head of Sales at FalconX. “In the near term, most expect the crypto market to remain range-bound until a clearer catalyst emerges. As a result, they are maintaining core Bitcoin positions while holding higher cash allocations elsewhere.”
Bitcoin May Benefit From Portfolio Rebalancing Flows
As the financial year approaches its close, Bitcoin could benefit from having underperformed traditional assets in Q4, according to Vetle Lunde, Head of Research at K33. This relative underperformance may prompt asset managers to rebalance portfolios in order to maintain target allocation levels.
Lunde points to historical precedents. In previous periods when Bitcoin lagged the S&P 500 in one quarter, BTC often delivered positive performance in the following quarter. Conversely, when Bitcoin significantly outperformed equities — as it did in Q2 — the market tended to correct in the early part of the next quarter.
So far in Q4, Bitcoin has underperformed the S&P 500 by approximately 26%, creating conditions that could trigger meaningful rebalancing activity.
“Funds with fixed Bitcoin allocation mandates may need to increase exposure into year-end,” Lunde explained. “That process can generate additional inflows during the final trading sessions of the year and extend into early January.”
This dynamic aligns with the well-known ‘January effect’, where asset reallocation and fresh capital deployment at the start of a new year provide short-term tailwinds.
Traders Remain Cautious Despite Price Stabilization
Despite recent price stability, overall risk appetite remains muted, according to K33’s analysis.
Activity in CME-listed Bitcoin derivatives continues to hover near yearly lows, with open interest in BTC futures sitting around 124,000 BTC. This suggests institutional traders are keeping leverage subdued as year-end approaches.
In the perpetual futures market, funding rates remain near neutral, while open interest has shown little change. Together, these signals indicate a lack of conviction in a strong short-term directional move.
Spot market data reinforces this cautious stance. Crypto spot trading volumes declined by roughly 12% through the end of last week, underscoring that many traders remain on the sidelines as the trading year winds down.
The Bigger Picture
While short-term enthusiasm remains constrained, the structural setup is becoming more constructive. Bitcoin’s underperformance relative to equities, combined with year-end portfolio rebalancing and historically supportive January flows, could create a favorable environment as the calendar turns.
For now, markets appear to be waiting for a clear catalyst — whether macro-driven or crypto-specific — to break the current consolidation range.
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