As we approach the end of 2025, the crypto market stands at a critical juncture. Many traders and analysts were in high hopes of a so-called “Santa rally”, a seasonal narrative that has historically led to cryptocurrencies going higher in the Q4. This, however, seems to be fading. The reality is that Bitcoin (BTC) is down nearly 32% from its all time highs set in October and has now broken a technically key zone of $86,000 (albeit with a bounce to the $87K at the time of this writing, trading as low as $85,100 on December 15, 2025.
This price action has materialized because of a profound shift in market structure, characterized by a decoupling from traditional risk-on correlations, thinning liquidity and the re-emergence of global macro concerns that threaten to override the long term bullish narrative.
This report provides an analysis of BTC and the broader altcoin market’s current outlook. It highlights the key factors that are causing the slow grind toward the downside over the past few days. We look at both fundamentals and technicals to identify if this recent decline calls for an extended bearish phase for BTC.
Key Levels Back in Focus
Bitcoin’s dip below the $86K mark on December 16, 2025 was an important structural change. This level has acted as shaky support for two weeks. For the bulls, this was the line in the sand to defend the high low structure established after the November correction. Notably, since the start of December, Bitcoin has been trading in a tight zone between $94K and $84K with it now drifting toward the lows.
It is important that BTC closes above the $86k mark as there is no significant support zones until the low $80Ks. Before this level however, $81.4K could be a key level to keep eyes on as this is also the true market. This is an on-chain indicator that essentially shows the average price most investors paid for Bitcoin. This on-chain price model has historically been very strong support zones or reversal areas in bull runs.
Altcoins Also Under Pressure
Source: CoinGecko
This downturn was not concentrated on Bitcoin alone. Altcoins took a hit as well with the TOTAL 2 market cap dipping by around 2%.
Source: CoinMarketCap
The top ten alts are down by an average of 2.65% over the last 24 hours with Ethereum, Solana and Dogecoin experiencing that sharpest drawdowns
Smaller cap coins like Aster, Starknet and Pump.fun also have shown strong downward price action of close to 9%.
Overall the recent drawdown indicates a broad market-wide pullback as capital feels the further reaches of the risk curve.
Seasonal Optimism Being Tested
Source: Coinglass
So far, seasonality has failed the bulls in 2025. Historically, Q4 has been a bullish period for crypto. To put it into perspective, Bitcoin’s average return in Q4 is +77% and has always finished in the green in a post halving year. This time around, BTC is at -24% this quarter.
Despite the gloom, the medium term outlook remains constructively bullish for those with a longer term horizon. While crypto has traditionally followed a 4 year cycle, macro analysts point that leading indicators (such as ISM PMI and broader economic signals) have not confirmed a cycle top yet and we might have a cycle that extends into 2026.
Another point worth noting is that, in contrast to previous cycles that were driven by retail mania and hype, the current growth phase is increasingly characterized by long term narratives like real world asset tokenization and institutional involvement.
What Traders Are Watching Next
As we look toward Q1 2026 and beyond, traders are paying close attention to the following signals which will likely provide clarity on directionality:
ETF Flows and Institutional Capital: Both BTC and ETH saw significant outflows on December 15th but a resumption or acceleration of inflows could provide fresh demand and boost market sentiment across crypto.
Macro data and Liquidity Conditions: Monetary policy and macro data are closely linked to crypto price action. Inflation, labor data shape expectations around interest rates and the liquidity cycle. These events directly affect risk appetite. When central banks move toward easier policy through interest rate cuts or balance sheet expansion, crypto stands to benefit from these improving liquidity conditions. On the other hand, tight liquidity could cap upside.
A short term risk traders are keeping close tabs on is the Yen carry trade and the next Bank of Japan (BOJ) interest rate decision scheduled for December 18th. For years, ultra-low Japanese rates allowed global funds to borrow cheap Yen and deploy capital into higher-yielding assets such as U.S. equities and Bitcoin, quietly supporting global liquidity.
Growing speculation that the Bank of Japan could hike rates to curb domestic inflation raises the risk of a carry trade unwind. Historically, such unwinds have coincided with sharp 20–30% Bitcoin drawdowns as leveraged positions are forced to liquidate. Even the anticipation of a BoJ shift is already contributing to a more cautious, risk-off tone in markets, prompting traders to reduce leverage ahead of potential volatility.
Is this just a December shakeout—or the start of a deeper pullback? Share your take.
