Late-December Santa Rally Conditions: Spot Demand, Macro Clarity, and a Clean $90K Reclaim
In Brief
Bitcoin remains below $90K as traders are split between a potential rebound and a deeper reset, with market sentiment shaped more by liquidity, macro conditions, and fading demand than by crypto-specific narratives.
Bitcoin spent the past week hovering under the big psychological ceiling at $90K, and the most important detail isn’t even the level itself — it’s how crowded that level has become. Every micro-rally into the high $80Ks / $90K zone is met by “sell the rip” positioning, while every dip lights up the same tired question: “Is this the start of the real unwind or just a reset before the next leg?” That split is basically the week in one sentence, and it’s showing up explicitly in trader positioning too, with forecasts ranging from a quick rebound to six figures to a flush back toward $70K “within days.”
The macro overlay did not help the bulls. One of the cleaner explanations for why BTC kept stalling is that the market stopped pricing a friendly Fed path with any confidence, and risk appetite softened accordingly.
Cointelegraph framed it as rallies being “thwarted” by fading rate-cut odds and softer US macro data — and whether you agree with every causal link or not, the practical outcome was obvious: less urgency to chase upside, more patience to wait for lower. If you’re looking for what the market is trading, it’s not a fresh “crypto narrative” this week — it’s liquidity conditions, and BTC is still behaving like a high-beta asset when the room gets even slightly nervous.
Now layer on the more uncomfortable crypto-native read: onchain and flow watchers spent the week pushing a “demand is shrinking” storyline. CryptoQuant analysts (via Cointelegraph syndication) argue that Bitcoin’s apparent demand growth has slowed materially since October 2025, with ETF outflows and weakening demand being treated less like a wobble and more like the start of a bear phase.
You don’t have to treat that as gospel, but it does explain the mood: rallies feel heavy because too many participants are trying to sell strength and too few are willing to chase breakouts into year-end.
That leads neatly into the “Bitcoin vs gold” mini-drama that ran through the headlines last week. Gold’s strength has tempted the classic rotation trade (“ditch BTC, buy the thing that’s actually working”), and Cointelegraph ran the counterargument from Matthew Kratter: don’t sell Bitcoin for gold, because BTC’s portability, fixed supply and digital-native properties still make it the superior long-run bet.
The more useful way to read this isn’t as a debate about which asset is morally better — it’s as a sentiment gauge. When crypto media is seriously entertaining “sell BTC for gold,” you’re no longer in euphoria; you’re in a market that’s trying to re-justify its risk premium.
The spicier sentiment catalyst was the circulating Fundstrat 2026 outlook. Screenshots attributed to Fundstrat outlined a “meaningful drawdown” risk into H1 2026, with explicit downside targets (BTC $60K–$65K; ETH $1,800–$2,000; SOL $50–$75) — notably contrasting with Tom Lee’s more bullish public posture.
Whether the document is fully authentic or not (the reporting frames it as “circulating” and screenshot-driven), the market impact is straightforward: it gives the cautious crowd a narrative permission slip to stay defensive. And in thin holiday liquidity, “permission slips” matter more than they should.
Meanwhile, the altcoin conversation quietly matured this week, mostly because Arthur Hayes said the loud part out loud: “altcoin season never ended — traders just missed the winners.”
That’s a decent reality check for anyone still waiting for a clean 2021-style index-wide melt-up. What we’ve been living through instead is a fragmented, rotating market where the “season” is selective: pockets run, leadership changes fast, and a lot of coins simply don’t participate. If your approach to alts is still “I’ll just buy the usual basket and wait,” Hayes’ point is basically a warning label.
One of the most constructive developments of the week didn’t even come from price action — it came from stablecoins and payments, which is where the real institutional plumbing keeps getting installed.
Klarna, the BNPL giant, announced a partnership with Coinbase to add USDC-denominated institutional funding into its mix. Importantly, Klarna itself says the initiative is still in development and separate from consumer/merchant crypto plans, which reads like a conservative rollout rather than a hype cycle. This matters because it’s exactly how stablecoins win in practice: not as a meme, but as balance-sheet and treasury infrastructure that lowers friction for large entities.
Visa also pushed the same direction, expanding USDC settlement capability for US financial institutions, with early settlement flows happening on Solana (Cross River Bank and Lead Bank were cited as initial participants, with broader rollout expected in 2026).
Again, the headline is less “Solana pump” and more “stablecoins are turning into an always-on settlement rail.”
And regulators, for once, are moving in a way that the market can price. US lawmakers floated a proposal that would exempt small stablecoin payments (up to $200) from capital gains recognition, while also offering deferral treatment for staking/mining rewards — a very “make it workable for normal usage” style change.
Separately, the Federal Reserve withdrew earlier guidance that constrained how Fed-supervised banks engage with crypto, framing it as outdated as understanding evolved.
These are not instant price catalysts the way an ETF headline is, but they are the kind of incremental legal and banking normalization that changes what 2026 liquidity can look like.
On the political/regulatory front, the market also digested news that Senator Cynthia Lummis — one of the most prominent crypto advocates in Congress — won’t seek reelection in 2026 (leaving office in 2027).
That’s not automatically bearish, but it does introduce a “who carries the torch next?” uncertainty around US legislative momentum, especially with major market structure debates queued for 2026.
Finally, the week had a slightly more philosophical overhang: quantum risk. The practical takeaway wasn’t “quantum is here” — it was that even serious Bitcoiners acknowledge migration would be slow. Reporting referencing Jameson Lopp framed a post-quantum transition as something that could take 5–10 years because Bitcoin is a decentralized protocol with real coordination constraints.
In market terms, this kind of narrative can weigh on sentiment at the margin precisely because it’s hard to handicap: not imminent enough to trade, but scary enough to feature in macro-style bearish takes.
So where does that leave us heading into the year’s close?
Right now, Bitcoin is stuck in a credibility test: it can either reclaim $90K with follow-through (meaning real spot demand and supportive liquidity), or it risks confirming the bearish read that demand is fading and the market needs a deeper reset first. If we do get a flush, the important nuance is that even the bearish calls being tossed around (like a trip toward ~$70K) are often framed as a “cycle reset” rather than a terminal thesis — in other words, plenty of big money still sees 2026 as the next real opportunity window, just potentially from lower levels and better structure.
If you’re trying to summarize the vibe: the market is not in capitulation, but it’s also not scared enough to force a clean bottom. It’s in that awkward, illiquid holiday zone where narratives fight, levels matter more than they should, and the next real move probably waits for January volume and macro clarity to return.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
