No doubt, Q4 has shaped up to be the weakest quarter of 2025.
The pullback has wiped out nearly 63% of the gains from the Q2–Q3 run, pushing many HODLers underwater.
Still, there’s a week left before the year wraps up, and the market is heading into a holiday-thin liquidity period. Timing-wise, that matters.
Bitcoin [BTC] is still trading 25% below its $126k high, but despite the ongoing FUD, its market dominance hasn’t really budged, hovering close to 60%. That points to capital staying parked rather than rotating out.
Source: TradingView (BTC.D/USDT)
In other words, that dominance points to underlying confidence.
Under normal conditions, you’d expect some rotation into altcoins. Instead, altcoin dominance (excluding–top 10) has compressed to just 6.73%, a five-year low, reinforcing that risk appetite remains concentrated in Bitcoin.
That sets up the real question: What happens if macro FUD cools and the market flips back risk-on? With the “holiday season” around the corner, do bulls step in, squeeze late shorts, triggering the textbook bear-trap setup?
Is a short squeeze setting up Bitcoin’s holiday bounce?
The holiday season couldn’t have come at a better time.
Technically, it’s been over a month since Bitcoin reclaimed $90k, and naturally, a thick short-liquidity cluster has built up just above that level, as shorts have been playing the volatility.
Zooming in, there’s over $5.8 billion in leveraged shorts around $95k, making it a clear target for bulls. Will they step in? Notably, Bitcoin’s MVRV is flashing “undervaluation,” adding extra incentive for a potential move.
Source: Coinglass
In short, the stage looks set for a textbook bear trap.
Supporting this, Bitcoin’s technicals are reinforcing the undervaluation. RSI is hanging around 35, and BTC has chopped under $90k for six straight weeks, potentially setting up that classic resistance-to-support flip.
From here, a breakout above this zone could hit stacked short-liquidity clusters, adding upward pressure and potentially kicking off Bitcoin’s “holiday rally,” with $95k as the near-term resistance target.
Final Thoughts
- Bitcoin dominance remains strong despite the Q4 pullback, signaling capital is staying put, while altcoin dominance hits a five-year low.
- Technicals hint at a potential bear-trap setup, with $5.8 billion in short liquidity poised to fuel Bitcoin’s holiday rally.
Source: https://ambcrypto.com/bitcoins-holiday-rally-are-btc-bulls-setting-up-a-classic-bear-trap/
