Don't Expect Bitcoin Fireworks Ahead of New Year, Traders Say, as BTC ETFs Lose $420M

Bearish trading in bitcoin BTC$89,597.16 markets continued late Monday as the asset briefly fell under $92,000 on profit-taking despite another mammoth MicroStrategy purchase, recovering to just over $92,800 as of Asian morning hours Tuesday.

Some traders expect the current price action to likely continue until February, weeks after president-elect Donald Trump takes office in the U.S. and sets into motion a barrage of policies that may help the market.

"We are skeptical of any New Year fireworks especially with funding healthy," traders at Singapore-based QCP Capital said in a Telegram broadcast. "January's average returns (+3.3%) are relatively similar to December's (+4.8%), and we could expect spot to remain in this range in the near-term before things start to pick from Feb onwards."

"Options flows are also reflecting similar sentiments with frontend vols drifting lower and risk-reversals most bid for Calls in March, partly due to significant March (120k-130k) Calls bought last Friday," they added. This means traders are betting on bitcoin prices going up in March. They're buying more call options (which profit if the stock rises) than put options. The cost of these options is going down, showing optimism for the March period.

BTC is on track to end December down 4%, its worst since 2021, as both retail investors and long-term holders cash out positions after a 117% yearly surge. Elsewhere, readings of the U.S. Chicago PMI indicate an economic slowdown, adding pressure on the market that tends to be correlated to such data.

In what looks to have been its final purchase of the year, Bitcoin development company MicroStrategy increased its BTC stash for the eighth consecutive week on Monday, adding another 2,138 BTC for $209 million in the week ended Dec. 29. That brought its total holdings to 446,400 BTC.

But news of the buying did little to stem losses. BTC prices slumped in the hours following MicroStrategy’s announcement, while shares of the company fell 8% to their lowest since early November.

The fall spread over to majors, with ether ETH$3,051.27, XRP, Solana’s SOL and Cardano’s ADA falling as much as 3% before recovering. BNB Chain’s BNB was little changed, while memecoins DOGE$0.1403 and SHIB$0.0₅8493 fell 5%.

The broad-based CoinDesk 20 (CD20), an index tracking the largest tokens by market capitalization, minus stablecoins, lost 2.7% in the past 24 hours.

Exchange-traded funds (ETFs) holding the asset recorded $420 million in outflows in their second-last day of trading ahead of the new year, data shows. Fidelity’s FBTC lost $154 million to lead outflows, followed by Grayscale’s GBTC at $130 million and BlackRock’s IBIT at $36 million.

The products have recorded more than $1.5 billion in net outflows since Dec. 19, pausing an impressive run in the first half of the month that saw nearly $2 billion in net inflows. Large outflows can reflect a shift in investor sentiment, possibly moving toward a more cautious or bearish outlook on bitcoin's short-term performance.