Bitcoin slips below $88K as holiday trading dries up liquidity. Should you brace for a breakout or breakdown?

Bitcoin slipped below the $88,000 mark on Wednesday, as thin holiday liquidity amplified the modest shifts in sentiment and left markets vulnerable to sudden swings. With traders booking profits into year-end, derivatives positioning easing and volumes fading, the world’s largest cryptocurrency is drifting sideways at a moment when conviction is scarce and volatility risks are quietly building.

Bitcoin was trading at $87,198.50, down 0.79% over the past 24 hours. While the token has clawed back 1.07% on a short-term basis, it remains under pressure over longer horizons, down 1.26%, reflecting a market that is hesitant rather than decisively bearish.

Thin liquidity, rising volatility risks

Market participants point to the seasonal slowdown as a key driver. Piyush Walke, Derivatives Research Analyst at Delta Exchange, said, “Bitcoin is trading near $87,000 as thin holiday liquidity, fund outflows and an upcoming options mega-expiry heightened volatility risks. Tax-loss harvesting and thin year-end liquidity appear to be driving the recent moves in crypto markets.”According to Walke, investors are largely staying on the sidelines ahead of Christmas. “The futures open interest declined by 1.5% to $128 billion and the volume in the spot market also dropped to $100 billion,” he said, adding that falling open interest in Bitcoin and Ethereum perpetual futures has reduced leverage, making crypto markets more susceptible to sharp price swings.

Walke noted that broader risk sentiment has also been shifting. “Gold surged past $4,500 an ounce to a new all-time high as investors sought safe havens amid rising geopolitical tensions and expectations of lower U.S. interest rates next year,” he said, underscoring how capital has been rotating away from high-risk assets.
On technical levels, Walke said, “On the charts, Bitcoin is trading sideways, with key support at $85,000 and resistance at $89,000, and a breakout or breakdown beyond these levels could drive the next directional move.”

$90,000 rejection keeps bulls in check

The failure to reclaim higher ground has reinforced caution. Sathvik Vishwanath, Co-Founder and Chief Executive Officer of Unocoin, said, “Bitcoin is trading cautiously around $88k–$89k after failing to sustain a rebound above $90k, with thin year-end volumes and investor caution ahead of key U.S. inflation and GDP data.”

Vishwanath added that near-term signals remain mixed. “Short-term technicals remain neutral, with support near $86k and resistance between $90k–$95k; a decisive move above $95k–$100k would signal renewed bullish momentum,” Vishwanath said.

While the immediate tone is subdued, Vishwanath said the longer-term narrative has not changed. “Broader sentiment is shaped by macro factors, especially Fed policy. Long-term outlook remains constructive, supported by post-halving supply scarcity and growing institutional adoption, while altcoins largely track Bitcoin’s direction amid ongoing volatility.”

Ethereum, the second-largest cryptocurrency, was also under pressure, trading at $2,939.91, down 1.45% over the past 24 hours. Investors are watching support near the $2,900 level as broader market direction remains uncertain.

Macro crosscurrents keep crypto range-bound

Nischal Shetty, Founder of WazirX, said crypto markets continue to mirror global liquidity conditions. “Over the past 24 hours, crypto markets have continued to reflect their close linkage with global liquidity conditions, even as the long-term investment case strengthens,” he said.

Shetty pointed to mixed global signals shaping investor behaviour. “Broad monetary easing across major economies signals concern around slowing growth rather than renewed economic momentum,” he said, while “stronger-than-expected U.S. growth data has added complexity to the policy outlook,” leaving markets oscillating between risk-on and risk-off modes.

In India, Shetty said domestic liquidity dynamics are also influencing sentiment. “The RBI has planned a ₹2 trillion liquidity infusion into the banking system, which may support broader market sentiment,” even as rising yields encourage capital rotation across asset classes. He added that crypto adoption is expanding beyond major cities, with Tier-2, Tier-3 and Tier-4 regions driving most trading activity.

For now, Shetty said Bitcoin remains stuck in a narrow band. “Bitcoin’s price in India around $87,500-$88,000 remains range-bound and sensitive to macro shifts, with the RSI in neutral territory indicating neither overbought nor oversold conditions,” he said, adding that recent volatility reflects “liquidity constraints and cautious positioning.”

As the year winds down, Bitcoin is offering neither a decisive breakdown nor a convincing breakout. For investors, the message is clear: in a market starved of liquidity and conviction, the next meaningful move may arrive suddenly, and only after the holidays thin the crowd even further.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)