Bitcoin Range-Bound As Low Liquidity, Falling Open Interest

BTC is heading into the final week of the year stuck in a tight range, as trading activity slows and many large investors step back for the holidays. According to a report from QCP Capital, weak liquidity and falling market participation are keeping Bitcoin from making a clear move up or down.

With Christmas and year-end holidays approaching, many institutions are reducing their exposure and locking in profits. This process, often seen every December, has led to less money actively moving through the market. As a result, Bitcoin has been trading sideways instead of forming a strong trend.

Thin Trading

During thin trading hours, Bitcoin is swinging quickly between $88,000 and $92,000. Ethereum is also seeing sharp moves, jumping from around $2,910 to $3,150. Despite these fast moves, the total value of forced liquidations was relatively small at about $440 million. This suggests fewer traders are using borrowed positions compared to earlier this year.

QCP noted that open interest has also dropped sharply. Bitcoin open interest is down more than 40% from its October peak, while Ethereum has fallen by over 50%. This drop shows that many traders are choosing to stay on the sidelines.

When fewer people are trading, prices can react strongly even to small buy or sell orders. They explained that with participation thinning, it takes much less money to move prices sharply in either direction. Such behavior makes the market more sensitive and prone to sudden swings, even without major news. At the same time, interest from everyday retail traders appears to have cooled. QCP also pointed out that online search interest for terms like “crypto” and “BTC” has fallen back to levels seen during previous bear markets.

Options Market Deals

This Friday’s Boxing Day options expiry could add another layer of volatility. More than half of the total open interest on Deribit is set to expire, making it an important event for short-term price direction.

QCP observed that interest in downside protection around the $85,000 level has declined, while bets on Bitcoin reaching $100,000 are still active. This points to a market that is neither strongly bearish nor fully bullish. Instead, sentiment appears cautiously neutral with a slight positive tilt.

While trading activity looks weak on the surface, there are signs that long-term buyers may still be accumulating quietly.  For the first time, Bitcoin held by ETFs and corporate treasuries now exceeds the amount held on exchanges. Ethereum is showing a similar trend, with exchange balances falling to their lowest levels in nearly ten years. These shifts reduce the amount of readily available supply in the market.

Bitcoin Slipped While Gold Shined

As for BTC price action, Bitcoin fell about 1.8% to $87,353 in the past 24 hours, lagging behind gold, which is up roughly 71% this year. The move reflects a mix of pressure points coming together at the same time from miners, institutions and charts. Bitcoin’s computing power dropped by about 4% in December, the sharpest fall since April. This happened as miners shut down expensive machines due to rising costs and tighter margins. When miners struggle, some are forced to sell Bitcoin to cover expenses, which adds pressure to prices in the short term.

Signals from major U.S. exchanges also suggest institutions are buying less Bitcoin than before. Even though companies like MicroStrategy raised fresh capital, it has not yet translated into new Bitcoin purchases. With gold hitting record highs, many investors are choosing safety over risk as the year comes to a close. This shift has pulled some capital away from crypto and into traditional assets.

For now, Bitcoin is expected to remain stuck between roughly $84,000 and $100,000 through the end of the year. Without a strong breakout above or below this range, neither buyers nor sellers are likely to gain full control.

Also Read: Gold Surges to All-Time High, Analysts Suggest BTC Could Catch Up