Bitcoin (BTC) Price: Asset Manager Rebalancing Could Drive January Rally

TLDR

• Bitcoin traded around $87,500 on Tuesday, up 2% over 24 hours after Monday’s decline
• Bitcoin underperformed the S&P 500 by 26% in Q4 2025, marking its worst quarterly performance relative to stocks
• K33 analyst Vetle Lunde suggests this underperformance could lead to rebalancing-driven buying in January 2025
• Historical pattern shows bitcoin often rebounds after quarters where it underperforms equities, as seen in Q1 2025
• Trading volumes and derivatives activity remain near yearly lows, showing traders are hesitant to take new positions

Bitcoin held steady around $87,500 during U.S. afternoon trading on Tuesday. The cryptocurrency gained 2% over the previous 24 hours.

Other major cryptocurrencies followed similar patterns. Ether, XRP and Solana all posted comparable gains during the same period.

Crypto-related stocks also recovered from Monday’s losses. Strategy climbed 3% while Coinbase advanced 1%.

The recovery comes after a challenging period for bitcoin. Josh Barkhoarder, head of sales at FalconX, said clients are positioned with cautious optimism. Most expect crypto to remain range-bound until a clear catalyst emerges.

Traders are holding core bitcoin exposure while keeping cash on the sidelines. They are waiting for market direction before making larger moves.

Rebalancing Could Drive January Gains

Vetle Lunde, head of research at K33, identified a potential catalyst for bitcoin’s next move. As year-end approaches, asset managers typically rebalance portfolios to maintain their mandated allocations.

Bitcoin’s performance relative to stocks this quarter creates an unusual situation. The cryptocurrency has underperformed the S&P 500 by 26% during Q4 2025.

This pattern has appeared before with predictable results. In Q1 2025, bitcoin underperformed the S&P 500. The cryptocurrency then started Q2 with gains.

The opposite occurred in Q2 2025. Bitcoin outperformed equities during that quarter. It then posted declines at the beginning of Q3.

Lunde explained that fund managers with predetermined bitcoin allocation targets may adjust their portfolios before year-end. This could result in excess inflows during the final trading days of 2025 and into early January 2026.

The size of the underperformance suggests a large rebalancing may be coming. Asset managers need to buy bitcoin to bring their portfolios back to target allocations.

Market Activity Shows Caution

Market data indicates traders remain hesitant despite price stabilization. Derivatives activity on the Chicago Mercantile Exchange sits near yearly lows.

Bitcoin futures open interest hovers around 124,000 BTC on the CME. This level represents one of the lowest points of 2025.

Perpetual swap markets show similar caution. Funding rates remain near neutral levels. Open interest shows little movement in either direction.

These metrics signal a lack of directional conviction among traders. They are not taking strong positions betting on price moves up or down.

Spot trading volumes also declined recently. Volume dropped 12% through last week according to K33 data.

The falling volumes confirm that many traders remain reluctant to engage. With the year drawing to a close, market participants appear content to wait.

Bitcoin’s Q4 underperformance against stocks now stands at 26%, setting up potential portfolio rebalancing flows in January 2026.

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