After an active morning, Bitcoin remained largely steady in the $87,500 area in U.S. afternoon trading, keeping gains around 2% over the past 24 hours. Altcoins, including ether , and Solana showed similar upward action.
Crypto-related stocks also saw rebounds after Monday’s drop, including a 3% gain for Strategy (MSTR) and a 1% advance for Coinbase (COIN).
Read more: Bitcoin rebounds from Monday’s worst levels, but $80,000 mark could come next, analyst says
“Customers are positioned with cautious optimism,” said Josh Barkhoarder, head of sales at FalconX. “In the short term, most expect crypto to remain constrained until we see a clear catalyst, so they retain core exposure to Bitcoin and have liquidity elsewhere.”
BTC could benefit from rebalancing, analyst says
As the end of the year approaches, bitcoin could benefit from its lackluster performance relative to other asset classes during the quarter, as asset managers rebalance their portfolios to maintain their mandated allocation, noted Vetle Lunde, head of research at K33.
Earlier this year, when BTC underperformed the S&P 500 in the first quarter, it began the next with gains, according to Lunde. Conversely, when BTC outperformed stocks in the second quarter, it saw declines early in the third.
So far in the fourth quarter, bitcoin has underperformed the S&P 500 by 26%, suggesting that significant rebalancing is needed.
“Fund managers with predetermined BTC allocation targets may adjust weightings through the end of the year, which could lead to excessive inflows during the last trading days of the year and early January,” Lunde continued.
Crypto traders are hesitant
Despite price stabilization, market participants remain hesitant to take new risks, added K33’s Lunde.
Derivatives activity on the Chicago Mercantile Exchange (CME) remains near yearly lows, with open interest in BTC futures hovering around 124,000 BTC, he wrote. In perpetual swap markets, funding rates have hovered around the neutral rate, with open interest showing little movement, signaling a lack of short-term directional conviction.
The decline in crypto spot trading volumes, down 12% last week, also confirms that many traders remain reluctant to commit as the year draws to a close.
