The market sentiment has indeed been quite suppressed these past couple of days. Bitcoin has been fluctuating around $87,500, with a volatility of only about ±2%. Both bulls and bears are locked in a tug-of-war between 87,000 and 88,000, with no apparent intention to break through.

The Fear and Greed Index is now at 24, which is already in the extreme fear zone. Retail investors are mostly on the sidelines, while institutional rebalancing actions are quite evident—spot ETF net outflows are around $120 million per day, and such capital withdrawal is common before the end of the year.

On-chain data is somewhat interesting. Whales have increased their holdings by 3,200 BTC in the past 24 hours, roughly equivalent to $280 million, indicating that large investors still have confidence at this level. The Bitcoin reserves on exchanges have dropped to 1.86 million BTC, a three-year low, which usually means coins are flowing into cold wallets—some people are really stocking up. The perpetual contract funding rate has turned negative, indicating short-term bearish dominance, but such extreme sentiment usually doesn’t last long.

Macro pressures are also significant. The US dollar index DXY has risen back above 101, and risk aversion in traditional markets is intensifying. Blockchain-related stocks in the US stock market are generally falling, with some compliant platforms dropping over 4% in a single day. Interestingly, the correlation between gold and Bitcoin over the past 30 days has risen to 0.68, suggesting that more people are treating them as similar safe-haven assets.

Risks to watch out for include: liquidity tends to be weaker at year-end, which could amplify volatility. The SEC’s decision on Ethereum ETF is approaching a critical window. Additionally, MEV attack incidents across multiple chains have been frequent recently, so be cautious when interacting with smart contracts.

In terms of trading strategy, the short-term focus is whether BTC can hold the support at 86,500. Mid-term, the panic zone could be used to gradually allocate some fundamentally solid assets. For long-term holdings, the 2024 narrative framework remains intact, so it’s wise to stay patient.

Tomorrow, keep an eye on a few points: the performance of crypto-related stocks after US stock market opens, whether Asian trading hours will see a volume breakout, and the impact of Federal Reserve officials’ speeches on interest rate expectations.

Honestly, market fear often breeds opportunity. When the fear index hits such extreme levels, reversals are usually not far off. The core of investing is going against human nature—remain rational when others panic, and seize opportunities when liquidity returns. (Data as of 12.25 18:00 UTC+8. Cryptocurrency market is highly volatile; invest cautiously.)