While traditional financial markets are enjoying a year-end rebound, Bitcoin has not only missed out on the 'Santa Rally' but also experienced a rare flash crash on the Binance exchange.
On Wednesday evening U.S. time, Bitcoin on the Binance BTC/USD1 trading pair suddenly flash-crashed from $87,600 to $24,100, a plunge of over 70%, before rapidly rebounding to around $87,000 within seconds.
This extreme volatility was confined to the USD1 pair, a stablecoin issued by the Trump family-backed World Liberty Financial, and was not seen on other major trading pairs.
Bitcoin is currently hovering around $87,000, trapped in a range between $85,000 and $90,000, with a year-to-date decline of over 7%. Since retreating from its all-time high in October, Bitcoin has fallen approximately 30% and is on track for its worst quarterly performance since the Q2 2022 collapse of TerraUSD and Three Arrows Capital.
This asset, known for its high volatility and speculative sentiment, has unexpectedly stalled at year-end, standing in stark contrast to the S&P 500 and gold, which are repeatedly hitting new highs.
Technical Flash Crash Triggered by Insufficient Liquidity
Analysts point out that such 'flash candles' are typically triggered by insufficient liquidity or display issues.
Emerging or low-volume stablecoin trading pairs often lack market makers providing dense quotes, resulting in shallow order book depth.A large market sell order, forced liquidation, or automated trading can quickly exhaust the buy-side liquidity, causing the price to briefly deviate from true market levels.
Cryptocurrency analyst and Coin Bureau co-founder Cryptonews stated:
This highlights the risks of executing operations on illiquid trading pairs, especially when the stablecoin trading path is still in its liquidity-building phase. Many spot investors found their positions largely unaffected before and after the flash crash.
He believes that in an environment of geopolitical uncertainty and fluctuating market liquidity, this serves as a warning against excessive leverage.
Temporary pricing issues caused by widening spreads, faulty market maker quotes, or trading bots reacting to anomalous quotes can also trigger such price dislocations.During thin trading hours, this effect is amplified as there are fewer participants to absorb the order flow and restore price equilibrium.
Missing the 'Santa Rally' and Diverging from Gold
In sharp contrast to Bitcoin's sluggish trend, traditional markets are sending截然不同的 signals.
U.S. stocks are experiencing a typical 'Santa Rally', with the S&P 500 closing at a record high of 6,921.42 points on December 24th, as tech stocks and momentum trading once again rewarded retail traders who held their positions.
Gold is also performing strongly, with the spot price hitting a record high of $4,525.18 per ounce on December 24th. Although it has since pulled back, its yearly gain remains over 70%, poised for its best annual performance since 1979 and the second strongest annual gain in over a century.
Bitcoin, however, is missing out on both fronts. For a period in early 2025, Bitcoin's movement was highly synchronized with risk assets, but it has fallen behind noticeably in the year-end行情.
Furthermore, its long-touted 'digital gold' attribute has failed to attract the defensive capital inflows driving the gold price higher. Timothy Misir, Head of Research at digital asset research firm BRN, stated:
“Hard assets” are attracting funds as long-term hedges, while crypto assets remain marginalized.
Historically, Bitcoin's performance during the 'Santa Rally' has been unstable.
Although it posted gains of 33% and 46% during the Christmas to New Year period in 2011 and 2016 respectively, it fell 14% and 10% in 2014 and 2021.Since 2011, Bitcoin has averaged a gain of 7.9% during the Christmas period.
Deteriorating Technicals and Lack of Buying
Some market inertia stems from technical factors.
Bitcoin has broken below its 365-day moving average around $102,000, a level that had acted as key support during this cycle. Failure to reclaim this threshold increases the risk of a deeper correction.
Over $23 billion in options expiring on December 26th have locked in directional bets, reinforcing the stalemate. Thin holiday liquidity has further reduced market activity. But these factors only highlight a deeper缺失: a clear absence of buyers willing to step in.
Continued selling by long-term holders constitutes another drag.
Pratik Kala, Portfolio Manager at hedge fund Apollo Crypto, said Bitcoin's price action this year has been "clearly disconnected from the extremely bullish news cycle surrounding the asset".
He attributes this gap to persistent selling by early holders, including the sharp pullback in October, factors that have collectively prevented rallies from gaining momentum.
Kala stated that much of the selling pressure now appears to have subsided, leaving Bitcoin in a consolidation range,which he believes could lay the groundwork for stronger performance next year.
Continued ETF Outflows
As traders entered the Christmas holiday, market liquidity declining and risk appetite waning, spot Bitcoin and Ethereum ETFs saw renewed outflows on December 24th.
According to SoSoValue data, spot Bitcoin ETFs recorded net outflows of $175 million on Wednesday, while spot Ethereum ETFs saw outflows of $57 million.
The single largest outflow came from BlackRock's IBIT, which lost $91.37 million, followed by Grayscale's GBTC with net outflows of $24.62 million.
Spot Ethereum ETFs saw net outflows of $52.7 million that day, with Grayscale's ETHE leading the selling pressure with outflows of $33.78 million, bringing its historical cumulative net outflows to $5.083 billion.
This pattern aligns with market norms during major holidays: trading volume plummets, market making desks reduce positions, and持仓 strategies turn defensive.
Konstantin Vasilenko, co-founder of Paybis cryptocurrency exchange, told media thathe did not expect a 'Santa Rally'.
Due to tax reasons, traders in some regions liquidate cryptocurrencies and exit some risk positions before the new year, so he does not anticipate major moves before January.
For now, while U.S. stocks rise and gold shines, Bitcoin's stagnation is sending its own signal: an asset built on excitement has little to be excited about at year's end.
