After missing out on the “Christmas rally” at the end of 2025, Bitcoin experienced a strong surge during the Asian trading session, with prices briefly breaking through $90,200, a daily increase of up to 3.1%. Meanwhile, Ethereum also rebounded strongly above the $3,000 mark. This rally was accompanied by a significant rebound in perpetual contract funding rates, indicating a short-term bullish sentiment. However, overall market sentiment remains cautious and complex: Bitcoin’s price is still about 30% below the all-time high of $126,251 set in October, and although futures open interest has rebounded from lows, it has not yet returned to the levels seen during market euphoria. Against the macro backdrop of continued liquidity expansion in major global economies, the cryptocurrency market is at a critical juncture of healing wounds, rebuilding confidence, and waiting for a new wave of capital rotation.
Key Breakthrough: Bitcoin recovers the psychological and technical threshold of $90,000
At the start of the new year, the crypto market has seen a long-awaited positive signal. According to data compiled by Bloomberg, Bitcoin suddenly gained momentum during Asian Monday morning trading, reaching a high of $90,200, regaining the key psychological level of $90,000, and seemingly breaking weeks of dull consolidation since the October plunge. This rally is not an isolated case; Ethereum also strengthened in tandem, with gains exceeding 4% at one point, successfully surpassing $3,000. This forms a short-term bullish technical setup, giving hope to many investors who remained cautious during the year-end downturn.
The driving force behind this rally contrasts interestingly with the decline in Q4 2025. Sebastian Bea, Chief Investment Officer at crypto asset management firm ReserveOne Inc., pointed out that Monday’s rally “seems to be partly driven by short-term retail traders increasing their positions in the futures market.” On-chain data supports this view. According to CryptoQuant, the Bitcoin perpetual contract funding rate, which reflects market leverage sentiment, has risen to its highest level since October 18, indicating increasing demand in derivatives markets for paying fees to maintain long positions. This is often seen as a leading indicator of short-term speculative sentiment warming.
However, the market structure has not yet recovered to a “healthy bull market” state. Although total futures open interest has rebounded from recent lows, Bea added that its scale “still remains well below the peak reached when Bitcoin hit its recent high in October.” This divergence—“rising prices but cautious positions”—deeply reveals the current market nature: a tentative recovery after severe trauma, not the start of a new upward wave driven by fresh narratives and exuberant confidence. Investors, especially institutions and large players, are still cautiously assessing the environment and have not yet committed heavily.
Current Key Indicators of the Bitcoin Market Compared to History
- Latest price: Surpassed $90,200 (intraday high).
- Comparison to historical high: Still about 28.5% below the record of $126,251 set on October 6, 2025.
- Market sentiment indicator: Perpetual contract funding rate rose to its highest since October 18, signaling a warming of derivatives market bullishness.
- Market activity indicator: Total futures open interest around $27.3 billion, rebounded from lows but significantly below historical peaks.
- Macro liquidity backdrop: M2 money supply in major economies (US, China, Japan, Eurozone) at all-time highs.
- Intrinsic value reference: Bitcoin’s “Energy Value Oscillator” indicator is at a decade low, with similar positions historically associated with long-term market bottoms rather than bull peaks.
Cautious celebration: Why traders still “keep a hand” during the rally?
To understand the contradictory mindset in the current market, one must look back at the textbook-style deleveraging storm of Q4 2025. In October, the market collapsed due to a series of liquidations of highly leveraged positions, with an estimated $19 billion worth of leveraged positions forcibly closed in a short period. This storm not only destroyed prices but also drained liquidity and risk appetite from the market. As one veteran trader put it, “the market was drained of its soul,” and traders became “reluctant to bet big on rebounds.”
This widespread cautiousness is evident in deep derivatives data. Although funding rates have turned positive, Bitcoin’s total open interest (aggregated open interest) remains around $27.3 billion after declining, not rising in tandem with prices. This signals a key message: new speculative positions with high leverage are limited. Most traders are adopting a “reduce risk exposure” rather than “increase leverage to bet on higher prices” strategy. In simpler terms, the market’s “gambling appetite” is being systematically squeezed out, and leverage is retreating.
This process of “cleansing leverage,” though painful and sluggish, may not be a bad thing from a long-term market health perspective. It signifies a necessary “reset.” Excessive leverage is like a pile of dry tinder—fuel for a bull run but also a hidden danger of a collapse. The current decline in leverage and the balancing of positions actually lay a relatively stable foundation for the market. If subsequent fundamentals or capital flows turn positive, Bitcoin will have more room to absorb new funds without the system becoming overly fragile and triggering another liquidation crisis.
Divergent macro narrative: Why is global liquidity surging but crypto assets “absent”?
A puzzling phenomenon for many macro analysts is that, despite the seemingly very friendly risk asset environment, Bitcoin and other cryptocurrencies did not show expected strength in H2 2025. M2 broad money supply in the US, China, Japan, and the Eurozone has all reached record highs. Theoretically, such abundant liquidity should spill over into stocks, real estate, and risk assets like cryptocurrencies. Yet, the reality is that the S&P 500 hit new highs before Christmas, while Bitcoin remained largely indifferent.
This divergence reveals that liquidity transmission is neither instant nor uniform. The current macro environment is full of uncertainties—diverging central bank policies, geopolitical tensions, and slowing economic growth. Under these conditions, large amounts of liquidity are more likely to be parked in “safe haven” assets like money market funds, short-term government bonds, or circulating within core assets like the “Big Seven” stocks, exhibiting a “risk-averse easing” pattern. Capital remains on the sidelines, not yet rotating en masse into higher-volatility edge assets, among which cryptocurrencies are included.
From a more intrinsic perspective—network intrinsic value—current Bitcoin may be in an undervalued accumulation phase. Some analysts cite the “Energy Value Oscillator” indicator, which tracks the energy (hashrate) invested in the Bitcoin network to gauge its underlying value support. This indicator is at a near ten-year low; historically, similar deep lows often correspond to long-term market bottoms rather than peaks. This suggests that, based on the fundamental security investment in the Bitcoin network, its price may be undervalued, and market pessimism might be excessive. The current market resembles a compressed spring: macro liquidity is the external force, while market structure reset and intrinsic value support form the spring itself. Pressure is building, and the direction may depend on a clear catalyst.
Outlook and strategy: Finding certainty in a healing market
In the face of this coexistence of recovery and divergence, hope and caution, how should investors position themselves? First, it’s important to recognize that the market phase has changed. The first stage of the “bull market” driven by narrative and leverage may be over. We are now in a “healing and bottoming” phase that requires more patience and a focus on fundamentals and capital flow data. During this phase, single-day large price swings should be interpreted cautiously, awaiting confirmation of trend.
Different participants should adopt different strategies. Short-term traders can focus on high-frequency indicators like funding rates and open interest changes, operating within ranges near key support and resistance levels (e.g., previous lows around $87,000 and resistance at $95,000), but must strictly control leverage to avoid flash crashes caused by liquidity shortages. Long-term investors and institutional allocators might see this as a “buy zone.” Market sentiment is subdued, leverage is being de-leveraged, and prices are far from highs, while global liquidity and Bitcoin’s on-chain fundamentals (hashrate, adoption) are stable or improving. This creates a “high-value” window under traditional value investing principles. Using dollar-cost averaging or pyramid accumulation strategies could be more effective for smoothing costs and capturing long-term trends.
Looking ahead to 2026, three forces will determine the market’s ultimate direction: first, when will global liquidity shift from a “risk-averse” to a “risk-seeking” mode; second, can the clarity of US crypto regulation under the Trump administration attract a new wave of institutional (TradFi) capital; third, will inflows into Bitcoin spot ETFs and other compliant products resume. Bitcoin breaking $90,000 is a positive short-term signal, but more like a strong punctuation in a long story rather than the story’s conclusion. In the macro backdrop of a liquidity feast, the crypto market—its most volatile “instrument”—is tuning its pitch, waiting for its solo moment. For prepared investors, this is not just about watching price swings but understanding the deep structural changes and preparing for the melody’s next movement when others hesitate.
