Crypto Traders Turn Cautious, Favor Bitcoin Over Risky Altcoin Bets

What Happened

According to market maker Wintermute, market activity has narrowed sharply into Bitcoin and Ethereum, with investors favoring delta-neutral and carry strategies over directional altcoin exposure while awaiting clarity from the Federal Reserve and macro indicators.

Yet, compressed basis rates and subdued funding levels indicate limited appetite for leveraged positions ahead of this week’s Fed decision and next week’s Bank of Japan rate announcement.

While ETF trade volume rose 21.33% to $22.6 billion and ETF MVRV increased to 1.67, the substantial outflows suggest some investors are taking advantage of elevated prices to reduce exposure.

Speaking with Cryptonews, Arthur Azizov, founder and investor at B2 Ventures, noted the impact of persistent withdrawals.

The company now holds 660,624 BTC acquired for roughly $49.35 billion at an average cost of $74,696, with 2025 additions totaling $21.48 billion, just $500 million short of its entire 2024 accumulation.

Market Context

Bitcoin has rebounded to around $92,000 after last week’s $2 billion liquidation event, but traders are adopting cautious positioning amid high volatility and looming central bank decisions.

The consolidation follows two months of macro uncertainty that triggered strong market turbulence. Total crypto market capitalization has recovered to approximately $3.25 trillion.

Market Absorbs Shock Without Follow-Through Selling

Despite the violent intraday move, the market absorbed the shock without triggering sustained selling pressure.

Glassnode data shows Bitcoin’s 14-day RSI climbing from 38.6 to 58.2, while spot volume increased 13.2% to $11.1 billion.

Year-end implied volatility remains elevated, with traders positioning for either $85,000 or $100,000 by December 26.

Options data reveals heightened caution, with the 25-delta skew reaching 12.88% and volatility spread turning sharply negative at -14.6%, indicating strong demand for downside protection despite the recent bounce.

The reversal indicates profit-taking or weakening institutional interest following Bitcoin’s recent volatility, which is adding pressure to near-term price action.

“When such a row of withdrawals persists, the whole market becomes quieter and gets less support.“

However, MicroStrategy continues its aggressive accumulation strategy, recently purchasing 10,624 BTC for approximately $962.7 million at an average price of $90,615 per bitcoin.

Traders Prioritize Yield Capture Over Directional Bets

Futures open interest has declined to $30.6 billion, while perpetual funding rates have turned more supportive, with long-side payments rising to $522,700.

However, the compressed CME basis has driven growing interest in delta-neutral strategies in lower-cap assets, where carry opportunities remain attractive, confirming limited appetite for directional altcoin risk.

Why It Matters

This suggests buyers remained active at the lows even as broader conviction remains uneven across on-chain, derivatives, and ETF metrics.

Details

Friday’s sharp drawdown was a major blow to Bitcoin’s recovery, with cascading liquidations erasing roughly $4,000 in just over an hour.

The liquidation event eliminated approximately $2 billion in leveraged positions, briefly pushing Bitcoin below $88,000 before buyers stepped in at lower levels.

Institutional Flows Turn Negative Amid Growing Caution

ETF flows have emerged as a major headwind, flipping from a $134.2 million inflow to a $707.3 million outflow.

“More than $2.7 billion has left BTC products over the past five weeks, and another $194 million left just in a single day,” he said.