Bitcoin's Struggle to Break $90K Amid Derivatives Pressure and ETF Volatility

Bitcoin's recent price action near the $90,000 level has underscored a critical juncture for the cryptocurrency market, where structural risks in leveraged derivatives markets and institutional demand imbalances are colliding. While the asset has shown resilience in consolidating above $88,000, the absence of a durable spot bid and mixed signals from ETF flows highlight vulnerabilities that could prolong the current range-bound phase.

Derivatives Pressure: Leverage as a Double-Edged Sword

The derivatives market has emerged as both a catalyst and a constraint for Bitcoin's near-term trajectory. Futures open interest has surged to near $60 billion, indicating fresh leverage entering the market, yet this figure has recently contracted by 0.8% to $75.47 billion, signaling caution among traders. This duality reflects a fragile equilibrium: while leverage amplifies upside potential, it also heightens the risk of cascading liquidations during volatility.

A key concern lies in the timing of U.S. liquidity. Bitcoin has exhibited a pattern of early-session strength followed by selling pressure as New York markets open, suggesting that leveraged longs are being unwound by institutional participants. This dynamic raises questions about the sustainability of the current bid, as leverage-driven buying often falters under macroeconomic stress or profit-taking. According to a report by Because Bitcoin, the absence of a sustained positive Coinbase premium and declining spot CVD (cumulative volume delta) further indicate that U.S. demand remains tentative.

ETF Volatility: Institutional Demand in Flux

Bitcoin ETFs, once a cornerstone of institutional demand, have shown a bifurcated trend. While 2025 saw record inflows-nearly $7 billion across the year-recent weeks have witnessed a reversal. For instance, U.S.-traded spot Bitcoin ETFs recorded $175 million in net outflows on December 24, capping five consecutive negative sessions. These outflows, however, must be contextualized within a broader framework: the ETF complex still holds over $113.8 billion in assets, with cumulative inflows since January 2024 reaching $56.9 billion.

The competition among ETF providers has also reshaped institutional flows. BlackRock's IBIT attracted $62 billion in inflows since its launch, partially offsetting losses from the Grayscale Bitcoin Trust (GBTC), which shed $21 billion to competitors. This internal rotation suggests that institutional demand is not collapsing but rather shifting toward products with superior liquidity and fee structures. However, analysts caution that short-term outflows-particularly during low-liquidity periods like holidays-can exacerbate price volatility.

Structural Risks: Macroeconomic Uncertainty and Liquidity Constraints

The broader macroeconomic environment adds another layer of complexity. While the Federal Reserve's rate-cut expectations have bolstered risk appetite, Bitcoin's performance remains sensitive to longer-term trends, such as the 200-day moving average and the psychological $100,000 level. Rising U.S. Treasury yields have also reduced the appeal of non-yielding assets like Bitcoin, compounding pressure on ETFs.

Moreover, the maturation of crypto regulation-exemplified by the EU's MiCA framework-has introduced compliance costs that could dampen retail and institutional participation. These structural headwinds, combined with the fragility of leveraged positions, suggest that Bitcoin's consolidation phase may persist until mid-January, when clarity on MSCI index inclusion for companies with Bitcoin-heavy treasuries could emerge.

Conclusion: A Tenuous Equilibrium

Bitcoin's struggle to break above $90,000 reflects a market caught between competing forces: the allure of leverage-driven rallies and the fragility of institutional demand. While derivatives open interest and ETF inflows remain robust on a year-to-date basis, the recent contraction in exposure and tactical outflows highlight the risks of overreliance on short-term leverage. For a sustained breakout, the market will need to see a reversal in U.S. spot ETF flows, a durable positive Coinbase premium, and a turnaround in spot CVD. Until then, $90,000 will likely remain a psychological battleground rather than a launchpad for a new bull move.