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Bitcoin Traders Remain Cautious Ahead of New Year as BTC ETFs Withdraw $420M

Bitcoin (BTC) trading continues to show a downward trend as it briefly dipped below $92,000 on Monday due to profit-taking. Despite a significant purchase by MicroStrategy, BTC bounced back to just over $92,800 by Tuesday morning in Asia.

Many traders believe this trend might continue until February. This outlook comes weeks before former President Donald Trump takes office in the U.S., potentially introducing policies that could support the market.

“We don’t anticipate major price jumps around the New Year, especially with funding staying strong,” explained traders from Singapore-based QCP Capital in a Telegram message. “January’s average returns (+3.3%) are similar to December’s (+4.8%), so we expect BTC to stay within this range in the near term before possibly rising in February.”

They also pointed out that options trading reflects similar caution. There’s a trend towards buying call options for March, suggesting traders expect BTC prices to increase then. The cost of these options is decreasing, indicating optimism for the upcoming months.

BTC is on track to close December down 4%, marking its worst performance since 2021. This drop follows a 117% surge over the year, leading both retail investors and long-term holders to sell their positions. Additionally, the U.S. Chicago PMI data points to an economic slowdown, adding further pressure on the market.

In what appears to be its last major purchase of the year, MicroStrategy, a company focused on Bitcoin, bought an additional 2,138 BTC for $209 million in the week ending December 29. This brings their total holdings to 446,400 BTC. However, this purchase didn’t stop BTC’s price from falling, and MicroStrategy’s shares dropped 8% to their lowest level since early November.

Other major cryptocurrencies also saw declines. Ether (ETH), XRP, Solana’s SOL, and Cardano’s ADA each fell by up to 3% before recovering. BNB Chain’s BNB remained mostly unchanged, while memecoins Dogecoin (DOGE) and Shiba Inu (SHIB) dropped by 5%.

Exchange-traded funds (ETFs) holding Bitcoin experienced $420 million in outflows on their second-last trading day before the new year. Fidelity’s FBTC led these outflows with $154 million lost, followed by Grayscale’s GBTC with $130 million and BlackRock’s IBIT with $36 million. Since December 19, these ETFs have seen over $1.5 billion in net outflows, halting a strong performance earlier in the month when nearly $2 billion flowed in. Large outflows like these suggest that investors might be becoming more cautious or bearish about Bitcoin’s short-term prospects.

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