Bitcoin's Deepening Bear Market and Structural Risks in December 2025

The Bitcoin bear market that took root in late 2025 has intensified in December, marked by a confluence of leveraged liquidity strains, macroeconomic uncertainty, and looming corporate selling pressures. As the price fell below $85,000-a 32% drop from its October peak of $126,200-investors and analysts are increasingly concerned about the structural fragility of the crypto market. This analysis examines the interplay of these three critical factors and their implications for Bitcoin's near-term trajectory.

Leveraged Liquidity: A Thinning Safety Net

Bitcoin's liquidity environment has deteriorated sharply, compounding the bearish momentum. Market depth-a measure of how much selling pressure a market can absorb before prices collapse-declined from a peak of $766.4 million in early October to a level of $568.7 million by late November. This thinning of liquidity has made Bitcoin particularly vulnerable to even modest sell-offs, as evidenced by the sharp price declines in mid-November.

The unwinding of leveraged positions has further exacerbated the situation. Open interest in BTC futures dropped significantly, while funding rates moved toward neutral territory, signaling a deleveraging of speculative bets. On-chain metrics, such as the STH Realized Profit/Loss Ratio, also deteriorated to 0.07x, indicating that most short-term traders were locked in losses as reported in the Glassnode analysis. Meanwhile, stablecoin supply contracted by $4.6 billion since November 1 according to market analysis, reducing the availability of buffers to absorb sell-side pressure.

Macroeconomic Headwinds: Rate Hikes and Risk-Off Sentiment

The broader macroeconomic environment has played a pivotal role in Bitcoin's decline. The yen carry trade has come under pressure as the Bank of Japan (BoJ) hinted at potential rate hikes. This unwinding has triggered a risk-off mood, with Bitcoin and tech stocks moving in tandem as global investors flee volatile assets.

Adding to the uncertainty, the Federal Reserve's policy outlook remains ambiguous. While some analysts anticipate a rate cut in December, others warn that a dovish shift could weaken the U.S. dollar and create divergent flows for Bitcoin. The market is also bracing for the December options expiry, with heavy put concentrations near $84,000 and call interest building around $100,000. These dynamics highlight the fragile equilibrium in a market where even minor macroeconomic shifts could trigger outsized volatility.

Corporate Selling Pressures: A Looming Catalyst

Corporate treasury holders have introduced additional uncertainty. Strategy, a major institutional buyer of Bitcoin, has signaled it may sell its holdings if its market net asset value (mNAV) ratio falls below 1 according to recent reports. With Strategy controlling approximately 3% of the total Bitcoin supply, such a move could deepen the bear market. Similarly, MicroStrategy's Bitcoin treasury remains under pressure, with analysts estimating potential outflows of $2.8 billion–$11.6 billion if the company were delisted from major equity indices.

The risk of large-scale corporate selling is compounded by the current price environment. As of December 1, 2025, Bitcoin's market cap stood at $1.69 trillion, with a dominance of 56.92%. However, this figure masks significant intraday volatility, as the price swung between $83,858.1 and $90,372.2 on December 1. In such a context, even a small sell-off by institutional holders could trigger a cascade of liquidations and further erode confidence.

Conclusion: A Fragile Equilibrium

Bitcoin's bear market in December 2025 is not merely a function of price declines but a reflection of deeper structural risks. The combination of thinning liquidity, macroeconomic uncertainty, and corporate selling pressures has created a fragile equilibrium where a single catalyst-a large institutional sale, a Fed policy shift, or a derivatives liquidation-could trigger a more severe selloff. While some off-chain indicators, such as neutral funding rates and controlled deleveraging as noted in the Glassnode report, offer cautious optimism, the broader sentiment remains risk-averse.

Investors must remain vigilant as the market navigates these challenges. The coming weeks will test whether Bitcoin can stabilize or if the structural weaknesses will lead to a prolonged downturn.