On-chain Signals Indicate Growing Bear Pressure and Position Rotation in Crypto Markets

The crypto market in late 2025 has become a battleground of competing narratives: institutional confidence in Bitcoin's long-term trajectory clashes with short-term bearish positioning driven by leveraged whale activity. On-chain data reveals a complex interplay of liquidity risks, strategic repositioning, and extreme leverage ratios, painting a picture of a market teetering between conviction and fragility.

Leveraged Whale Activity: A Double-Edged Sword

Whale movements have historically acted as both barometers and catalysts for crypto market volatility. In late 2025, this dynamic intensified as large players deployed leveraged positions to amplify gains-or losses. A single whale with an estimated $11 billion in assets opened $748 million in leveraged long positions across Bitcoin, Ethereum, and Solana in early 2026, signaling bullish conviction. However, this activity followed a $330 million Ethereum liquidation, suggesting a strategic repositioning rather than a retreat from the market.

Conversely, bearish signals emerged as a major whale shifted to a $243 million short position, including a $168 million BTC short at 10x leverage and a $56 million ETH short at 15x leverage. Such extreme leverage ratios amplify both potential rewards and systemic risks, particularly in markets already grappling with liquidity constraints. As noted by a report from Alaric Securities, the 2025 liquidity crisis exposed the fragility of crypto's market structure, where overleveraged positions and shallow order books create self-reinforcing cycles of price declines and cascading liquidations.

Position Rotation and Institutional Rebalancing

The end of 2025 marked a pivotal shift in institutional and whale behavior. Bitcoin Treasury Companies, for instance, resumed net buying of BTC, with large stakeholders accumulating 56,227 BTC between December 17 and early 2026. This contrasts with declining Bitcoin ETP holdings, reflecting a broader reallocation of capital toward long-term hodling strategies. Meanwhile, altcoins like Solana faced asymmetric risks, with a long/short positioning ratio of 4.01x indicating extreme bullish bias and heightened vulnerability to downward shocks.

Position rotation also extended to altcoins. A whale previously known for a $197 million BTC short flipped to a long position in Solana, executing 850 long opens within an hour. This abrupt shift underscores the psychological and structural influence of large players, whose actions can trigger herd behavior among retail investors and exacerbate volatility.

Liquidity Risks and Funding Rate Dynamics

Liquidity risks remain a critical concern. The Bitcoin hash rate declined by 4% in December 2025-the steepest drop since April 2024-often interpreted as a contrarian bullish signal. However, this decline, coupled with regulatory pressures in China and other regions, highlights the fragility of mining infrastructure and its indirect impact on market depth.

Funding rates for perpetual futures contracts also revealed imbalances. While Bitcoin and Ethereum annualized funding rates stood at 26% and 41% respectively in late 2025, altcoins struggled to attract institutional capital. This divergence suggests a growing concentration of value in Bitcoin and app-layer platforms, which captured nearly 90% of crypto fees in 2025. For investors, this means liquidity is increasingly centralized, amplifying the risks of leveraged positions in less-liquid assets.

Strategic Implications for Investors

The interplay of whale activity and liquidity risks demands a nuanced approach. For one, extreme leverage ratios-particularly in altcoins-create asymmetric downside risks. A 20x leveraged short on Solana, for example, could trigger rapid liquidations if the asset's price moves against the position. Additionally, whale-driven repositioning often precedes periods of heightened volatility, as seen in XRP's three-month high in whale activity. Retail investors must remain cautious of FOMO or FUD cycles, which are amplified by large players' ability to skew market sentiment.

Institutional investors, meanwhile, may find opportunities in Bitcoin's renewed accumulation by treasuries and the broader shift toward fundamentals-driven strategies. However, they must also monitor the risks of overleveraged positions, particularly as global liquidity expansion ends and markets become more selective.

Conclusion

The late 2025 crypto market is defined by a tug-of-war between bullish accumulation and bearish shorting. On-chain signals-from leveraged whale positions to funding rate imbalances-highlight both the resilience and fragility of this ecosystem. For investors, the key lies in balancing conviction with caution: leveraging insights from whale activity while hedging against liquidity risks in an increasingly polarized market.