After an active morning, bitcoin remained largely flat in the $87,500 area in US afternoon trade, keeping gains around the 2% mark over the past 24 hours. Altcoins, including Ether , and solana showed similar upward action.
Crypto-related stocks also saw gains after Monday’s plunge, including a 3% gain for Strategy ( MSTR ) and a 1% advance for Coinbase ( COIN ).
Read More: Bitcoin bounces off Monday’s worst levels, but sub-$80,000 could come next, analyst says
“Customers are positioned with cautious optimism,” said Josh Barkhoarder, head of sales at FalconX. “In the short term, most expect crypto to remain range-bound until we see a clear catalyst, so they hold core exposure to bitcoin and sit on cash elsewhere.”
BTC May Benefit From Rebalancing, Analyst Says
With year-end approaching, bitcoin may benefit from its sluggish performance compared to other asset classes through the quarter as asset managers rebalance their portfolios to maintain their mandate allocation, noted Vetle Lunde, head of research at K33.
Earlier this year, when BTC underperformed the S&P 500 index through the first quarter, the next started with gains, according to Lunde. Conversely, when BTC outperformed stocks in the second quarter, it posted declines at the beginning of the third.
So far in the fourth quarter, bitcoin has underperformed the S&P 500 by a whopping 26%, suggesting a significant rebalancing is on the way.
“Fund managers with pre-determined BTC allocation targets may adjust year-end weights, potentially resulting in excess inflows during the final trading days of the year and early January,” Lunde continued.
Crypto traders hesitate
Despite prices stabilizing, market participants remain hesitant to take on new risks, added K33’s Lunde.
Derivatives activity on the Chicago Mercantile Exchange (CME) remains near annual lows, with open interest on BTC futures at around 124,000 BTC, he wrote. In perpetual swap markets, funding rates hovered around the neutral rate with open interest showing little movement, signaling a lack of near-term directional conviction.
Declining spot crypto trading volume, down 12% over the past week, also confirms that many traders remain reluctant to engage as the year draws to a close.
