Despite a challenging close to 2025 that saw significant market pullbacks, Bitcoin is displaying surprising resilience, setting the stage for a potential year-end resurgence. With a holiday-thin liquidity period approaching, critical technical indicators and strong market fundamentals hint at an impending "bear trap" scenario that could propel Bitcoin upward.
Bitcoin's Unyielding Grip on the Market
The final quarter of 2025 has proven to be the weakest, wiping out a substantial portion of earlier gains and leaving many investors underwater. Yet, amid this downturn and persistent FUD (fear, uncertainty, and doubt), Bitcoin's market dominance has held firm, hovering near 60%. This sustained dominance suggests that capital is staying put in BTC rather than rotating out or into riskier altcoins. Reinforcing this sentiment, altcoin dominance (excluding the top 10) has plummeted to a five-year low of just 6.73%, underscoring a concentrated risk appetite in Bitcoin and an underlying confidence in its stability despite market volatility.
The Perfect Setup for a Holiday Rally
The confluence of the holiday season and thin liquidity presents a unique opportunity for market dynamics. Technically, over a month has passed since Bitcoin reclaimed the $90k mark, leading to a significant build-up of short liquidity just above this level. Specifically, over $5.8 billion in leveraged shorts are clustered around the $95k zone, creating a clear target for a bullish squeeze. Further bolstering this outlook, Bitcoin's MVRV indicator is currently flashing "undervaluation," while its Relative Strength Index (RSI) hovers around 35. After six consecutive weeks of trading below $90k, the market appears primed for a classic resistance-to-support flip. This setup could trigger a textbook bear trap, forcing a short squeeze that fuels an upward surge, potentially initiating Bitcoin's "holiday rally" with $95k as a near-term resistance target.
