Bitcoin’s Year-End Crossroads: A Battle Between Support and Resistance

Bitcoin CRYPTO000BTC

As 2025 draws to a close, Bitcoin's price action is characterized by constrained movement. The leading cryptocurrency finds itself caught between a clear technical resistance level just below $90,000, conflicting institutional capital flows, and thinning market liquidity. This tension raises a pivotal question for traders: is the existing price foundation solid enough to provide a stable launchpad for the crypto markets in 2026?

A stark contrast in institutional behavior is currently shaping the market. On one side, corporate buying remains aggressive. Strategy (MSTR) continued its substantial accumulation strategy between December 22nd and 28th, purchasing an additional 1,229 Bitcoin for approximately $109 million. The average purchase price was $88,568 per coin. This acquisition boosts Strategy's total holdings to a formidable 672,497 BTC, cementing its status as the largest publicly traded corporate holder of Bitcoin.

Conversely, the U.S. Spot Bitcoin ETF landscape tells a different story. The Christmas week saw net outflows totaling $782 million. A notable event occurred on December 29th, when BlackRock's flagship IBIT ETF experienced single-day outflows of around $193 million. Concurrently, approximately $214 million was transferred to Coinbase. This selling pressure at the ETF level directly counteracts the corporate buying spree and helps explain the market's repeated failure to sustain a breakout above the $90,000 threshold.

Technical Perspective: Trading Below the Year's Opening Level

From a chart analysis standpoint, Bitcoin has faced repeated rejection at the psychologically significant $90,000 level in recent days. Each failed breakout attempt has forced the market to probe deeper support zones.

The current trading price near $87,258 places Bitcoin only marginally above key medium-term moving averages. A critical technical detail is its position below the year's opening price of $93,400. To close 2025 in positive territory would require a gain exceeding 6% in the remaining hours—a scenario market observers deem increasingly unlikely given the lack of trading activity and subdued market breadth. Bitcoin remains approximately 30% below its all-time high of around $126,000, set in October 2025. The Relative Strength Index (RSI) hovering near 38 indicates weak market momentum but does not yet signal a clearly oversold condition.

On-Chain and Derivatives Signals: Whale Buying and Leverage Reset

On-chain data presents a mixed picture. Over the past week, Coinbase emerged as a significant net seller, suggesting distribution pressure, particularly from shorter-term traders and ETF-related investors.

However, increased buying activity from large wallet addresses, commonly referred to as "whales," is detectable in the $80,000 price zone. These entities appear to be using the current period of weakness to build positions, thereby absorbing a portion of the selling pressure. Analysts interpret this as a sign that institutionally-inclined capital views lower prices as a potential accumulation opportunity.

Conditions in the derivatives market have cleared significantly following the recent options expiration. Aggregate open interest has plunged by nearly 50%, representing a classic "leverage washout" that has flushed numerous speculative positions from the system. Nonetheless, underlying tension persists. The annualized funding rate for perpetual futures on platforms like Deribit remains above 30%, indicating a persistent overhang of long leverage. This could trigger additional selling pressure if core support levels are decisively broken.

Regulatory Tailwinds: Japan's Favorable Tax Shift

Amidst short-term price volatility, a supportive regulatory development has emerged. Japan has announced a tax reform set for 2026 that will formally classify cryptocurrencies like Bitcoin as financial products.

Under the new rules, profits from "specified crypto-assets" will be taxed at a flat rate of 20%. This replaces the previous system where significantly higher, progressive tax rates of up to 55% could apply. The reform also introduces a three-year loss carry-forward provision. These changes align the taxation of crypto assets more closely with the rules governing traditional equities, potentially providing a medium-term boost for institutional and long-term investors in the Japanese market.

Market Sentiment and the Path Into 2026

Year-end sentiment remains fragile. The proximity to the annual close amplifies the importance of technical levels and focuses attention on short-term price action. While prominent bulls like Tom Lee and analysts at JPMorgan have floated 2026 price targets ranging from $170,000 to $250,000, models from CryptoQuant paint a more cautious picture, suggesting potential pullbacks toward $56,000.

In the immediate term, market focus is centered on the support band between $86,000 and $87,000. A successful defense of this area would make another attempt at the $90,000 resistance zone in early Q1 2026 a plausible scenario. However, a decisive breakdown would confirm a bearish shift in structure, opening the path for a deeper correction toward $80,000 to $82,000. Such a move would undoubtedly cast a shadow over market sentiment at the dawn of the new crypto year.