Bitcoin Nears Red Yearly Close: Galaxy Digital Weighs In on Market Dynamics
As 2025 draws to a close, Bitcoin finds itself on the cusp of printing a rare "red yearly candle," a surprising twist following a year filled with pro-crypto legislative advancements and significant institutional interest. Analysts at Galaxy Digital are scrutinizing this unexpected year-end setup, offering insights into both the immediate market mechanics and the long-term trajectory of the world's leading cryptocurrency.
2025's Tepid Finish and Imminent Shifts
Galaxy Digital's head of research, Alex Thorn, notes that Bitcoin is down 6.3% year-to-date and 8.25% year-over-year. To avert a negative annual close, BTC would require a daily close above $93,389 on New Year's Eve. The fourth quarter, in particular, has been softer than many bulls anticipated, with Bitcoin trading roughly 36% below its October 6, 2025 all-time high of $125,296. Thorn attributes this stalled market feel to "mechanical" factors, pointing to a large month-end options expiry that could soon release Bitcoin from its current $80,000-$90,000 range. January is anticipated to be a pivotal period, potentially prompting portfolio managers to re-evaluate their positions. Nonetheless, headwinds persist, including significant "whale distribution," a recent leverage wipeout, and increasing competition for capital from AI, hyperscalers, gold, and the "Mag 7" tech stocks.
Long-Term Resilience Amidst Shifting Foundations
A key observation from Galaxy Digital highlights a divergence between Bitcoin's price performance and the behavior of US Bitcoin ETFs. Despite Bitcoin's sharp declines, cumulative ETF inflows are only down 9% from their October peak of $62 billion. This resilience suggests that the recent selling pressure originates "from inside the house," with long-term holders liquidating assets more aggressively than at any point since the 2017 bull run, selling into demand from newer brokerage-led channels. Thorn views this distribution as beneficial for Bitcoin's long-term maturity, broadening ownership and raising the average cost basis. Evidence of this underlying strength is seen in Bitcoin's realized market cap exceeding $1.1 trillion and a realized price above $56,000. Looking forward, Galaxy Digital projects Bitcoin could reach $250,000 by the end of 2027, though 2026 is deemed "too chaotic to predict." Options markets reflect this uncertainty, pricing nearly equal odds for substantial upward or downward movements by mid and end-2026. This dynamic, coupled with a structural decline in long-term volatility and a "vol smile" that favors puts over calls, indicates Bitcoin's evolution into a more established macro asset. Thorn emphasizes that the broader narrative remains the growing demand for non-dollar hedges, asserting that a relatively small incremental allocation by major investors, central banks, or nation-states could ignite a significant "stampede" towards Bitcoin as a global monetary debasement hedge.
