No doubt, Q4 has shaped up to be the weakest quarter of 2025.
The pullback has wiped out nearly 63% of the gains from the Q2–Q3 run, pushing many HODLers underwater.
Still, there’s a week left before the year wraps up, and the market is heading into a holiday-thin liquidity period. Timing-wise, that matters.
Bitcoin [BTC] is still trading 25% below its $126k high, but despite the ongoing FUD, its market dominance hasn’t really budged, hovering close to 60%. That points to capital staying parked rather than rotating out.
In other words, that dominance points to underlying confidence.
Under normal conditions, you’d expect some rotation into altcoins. Instead, altcoin dominance (excluding–top 10) has compressed to just 6.73%, a five-year low, reinforcing that risk appetite remains concentrated in Bitcoin.
That sets up the real question: What happens if macro FUD cools and the market flips back risk-on? With the “holiday season” around the corner, do bulls step in, squeeze late shorts, triggering the textbook bear-trap setup?
Is a short squeeze setting up Bitcoin’s holiday bounce?
The holiday season couldn’t have come at a better time.
Technically, it’s been over a month since Bitcoin reclaimed $90k, and naturally, a thick short-liquidity cluster has built up just above that level, as shorts have been playing the volatility.
Zooming in, there’s over $5.8 billion in leveraged shorts around $95k, making it a clear target for bulls. Will they step in? Notably, Bitcoin’s MVRV is flashing “undervaluation,” adding extra incentive for a potential move.
In short, the stage looks set for a textbook bear trap.
Supporting this, Bitcoin’s technicals are reinforcing the undervaluation. RSI is hanging around 35, and BTC has chopped under $90k for six straight weeks, potentially setting up that classic resistance-to-support flip.
From here, a breakout above this zone could hit stacked short-liquidity clusters, adding upward pressure and potentially kicking off Bitcoin’s “holiday rally,” with $95k as the near-term resistance target.
Final Thoughts
- Bitcoin dominance remains strong despite the Q4 pullback, signaling capital is staying put, while altcoin dominance hits a five-year low.
- Technicals hint at a potential bear-trap setup, with $5.8 billion in short liquidity poised to fuel Bitcoin’s holiday rally.
