Why Bitcoin Struggles to Gain Traction Near $88K During Thin Year-End Trading

Bitcoin has failed to break decisively above the $90,000 threshold as year-end seasonal dynamics weigh on price momentum. As of January 26, 2026, BTC trades at $87.56K, up 1.2% over the past 24 hours but still reflecting broader consolidation pressures that have defined the market since October. The world’s largest cryptocurrency faces multiple headwinds—from holiday trading voids to lingering effects of leveraged liquidations—that continue to constrain rally attempts even as traditional markets recover.

Current market conditions tell the story of a market caught between competing forces. Bitcoin’s $1.15 billion in 24-hour trading volume reflects the participation void typical of year-end periods, while the asset’s $1.75 trillion market capitalization masks underlying fragility. With 19.98 million BTC in circulation and a hard cap of 21 million coins, the real challenge isn’t supply—it’s demand.

Seasonal Trading Void Dampens Rally Momentum

The inability to sustain levels above $90,000 stems partly from the most predictable culprit: thin liquidity during holiday periods. Traders and market makers typically reduce exposure in late December and early January, creating an environment where normal price discovery mechanisms break down.

Jasper De Maere, desk strategist at Wintermute, highlighted this dynamic in recent commentary, cautioning traders against reading too much into short-term price action until liquidity returns to normalized levels. “Exaggerated moves on light flow” become the norm in these windows, according to his note to Bloomberg. When trading volumes contract sharply, the same order flow that might trigger modest price moves during normal conditions can produce volatile swings in either direction—often followed by quick reversals.

Price action has remained confined to a broad $85,000-$95,000 range for several months, a structure that emerged following October’s sharp correction. Bitcoin touched an all-time high of $126.08K earlier in the cycle, underscoring the severity of the pullback from those elevated levels.

Liquidations and Leveraged Position Unwinding Persist

Beyond seasonal factors, the ghost of October’s leveraged unwind continues to haunt market participants. That month witnessed record levels of leveraged long positions that subsequently triggered cascading liquidations. A sharp sell-off on October 10 flushed out long exposure and reset market positioning, but the scars remain.

QCP Capital, in recent analysis, pointed to a steep decline in derivatives activity following the latest options expiry on Friday. Open interest in Bitcoin futures and options dropped by nearly 50%, signaling that many traders have moved to the sidelines rather than reestablishing positions. The firm noted that dealers who were long gamma ahead of the expiry event are now short gamma on the upside—a shift that creates headwinds for sustained rallies.

When gamma positioning shifts short on the upside, rising prices force hedging activity that amplifies short-term volatility, particularly when liquidity is already thin. Deribit’s perpetual funding rate surged above 30% following the options expiry, up from near-flat levels beforehand, indicating traders crowded into bullish positioning despite the weak technical environment. Elevated funding rates typically signal overheated positioning and raise the cost burden for maintaining long exposure.

ETF Outflows and Derivatives Positioning Add Headwinds

Spot Bitcoin exchange-traded funds, initially seen as a catalyst for sustained demand, have instead become a source of pressure. According to Bloomberg data, ETF outflows have accumulated to roughly $6 billion during the fourth quarter alone, adding steady downward pressure as Bitcoin repeatedly failed to reclaim $90,000.

This capital flight contrasts sharply with the enthusiasm that greeted Bitcoin’s year-start surge, which was fueled by optimism around crypto-friendly policy shifts. That sentiment evaporated as uncertainty surrounding tariff agendas rattled global markets and dampened risk appetite across asset classes. While U.S. equities have largely recovered from those shocks, Bitcoin has lagged, losing approximately 5% over the past 12 months and tracking toward its first annual loss in three years.

The combination of ETF redemptions, low derivatives participation, and seasonal trading voids creates a self-reinforcing cycle of weakness.

Technical Outlook: Key Levels to Watch

From a technical perspective, Bitcoin Magazine analysts indicated the market continues to reject lower levels within a broadening wedge pattern, a development suggesting downside momentum has weakened—but upside strength remains absent.

Immediate resistance sits at $91,400, with a larger barrier at $94,000. A weekly close above $94,000 could potentially open a path toward $101,000 and $108,000, though analysts caution that resistance remains heavy throughout this zone. Bitcoin last approached these elevated levels during the October peak before the correction accelerated.

On the downside, $84,000 represents the critical support floor. A break below that level could trigger a deeper retracement toward the $72,000 to $68,000 range, representing a retreat toward mid-cycle lows.

For now, Bitcoin remains trapped in consolidation, waiting for either a return to normalized trading conditions or a catalyst strong enough to overcome the confluence of seasonal, technical, and sentiment-driven headwinds currently pressing the market.