Bitcoin Needs 6.24% Rally to Close Year in Green as ETFs Face $782M Christmas Outflows

Bitcoin Trading Below Critical Support Level

Bitcoin has been trading well below its 365-day moving average, a critical support level, since November, breaking the structural uptrend that began in 2023 ^[1]. According to analyst data, Bitcoin needs a 6.24% rally to close 2025 in the green ^[1].

The cryptocurrency's performance comes amid uncertainty about future Federal Reserve policy decisions, which have significant implications for risk assets including cryptocurrencies.

Federal Reserve Rate Cut Outlook Uncertain

The Federal Reserve issued three 25 basis point (BPS) interest rate cuts in 2025 ^[1]. However, Federal Reserve Chairman Jerome Powell issued mixed forward guidance at the Federal Open Market Committee's (FOMC) December meeting, casting doubt about another interest rate cut at the next FOMC meeting in January ^[1].

"There is no risk-free path for policy," Powell said ^[1].

Only 18.8% of investors expect an interest rate cut in January, according to the Chicago Mercantile Exchange (CME) Group's FedWatch tool ^[1]. Lower interest rates are positive price catalysts for risk-on assets, including cryptocurrencies, which tend to rally with fresh liquidity injections ^[1].

Spot Bitcoin ETFs See Extended Withdrawal Period

Spot Bitcoin ETFs extended a six-day withdrawal streak during Christmas week, with total outflows reaching $782 million ^[2]. Notably, Friday marked the sixth consecutive day of net outflows for spot Bitcoin ETFs, making it the longest withdrawal streak since early autumn ^[2]. Over this six-day stretch, cumulative outflows exceeded $1.1 billion ^[2].

The most significant single-day withdrawal during the period occurred on Friday, when spot Bitcoin ETFs posted $276 million in net outflows ^[2]. BlackRock's IBIT led the losses with nearly $193 million exiting the fund, followed by Fidelity's FBTC at $74 million ^[2]. Grayscale's GBTC also continued to see modest redemptions ^[2].

Total net assets across US-listed spot Bitcoin ETFs fell to roughly $113.5 billion by Friday, down from peaks above $120 billion earlier in December, even as Bitcoin prices held relatively steady near the $87,000 level ^[2].

Analysts Point to Seasonal Factors

Vincent Liu, chief investment officer at Kronos Research, said Bitcoin ETF outflows during the Christmas period are not unusual, pointing to "holiday positioning" and thinner liquidity rather than a breakdown in underlying demand ^[2].

"As desks return in early January, institutional flows typically re-engage and normalize," he told Cointelegraph ^[2].

Looking ahead, Liu expects conditions to improve in early January as institutions return and capital flows normalize ^[2]. He added that a potential shift toward Federal Reserve easing in 2026 could further support ETF demand, with rate markets already pricing in 75 to 100 basis points of cuts ^[2].

"Rates markets are already pricing ~75–100 bps of cuts, pointing to easing momentum. Next, bank-led crypto infrastructure keeps scaling, reducing friction for large allocators," he said ^[2].

Institutional Sentiment Shifts

In a recent report, Glassnode said that Bitcoin and Ether ETFs have entered a sustained outflow phase, suggesting institutional investors are pulling back from crypto exposure ^[2]. Since early November, the 30-day moving average of net flows into US spot Bitcoin and Ether ETFs has remained negative, pointing to muted participation as broader market liquidity tightens ^[2].

As ETFs are widely viewed as a proxy for institutional sentiment, the prolonged outflows indicate a shift away from crypto among large allocators after a year in which institutions were a major market driver ^[2].