Bitcoin Drops Below $88,000 as ‘Santa Rally’ Momentum Fades

Cryptocurrency markets saw a sharp pullback on Tuesday, with Bitcoin (BTC) falling back below the $88,000 level after briefly trading above $90,000 a day earlier. As risk appetite weakened, total crypto market capitalization declined 2.4% over the past 24 hours to approximately $3.04 trillion.

Bitcoin is currently trading near $87,383, marking a 2.4% daily decline, while Ethereum (ETH) slipped to around $2,957, down 2.7%. Other top-10 cryptocurrencies also posted losses ranging from 1.4% to 2.4%, reflecting broad-based selling pressure.

Are Traders Still Betting on a Santa Rally?

According to Glassnode, Bitcoin perpetual futures open interest increased roughly 2%, rising from 304,000 BTC to 310,000 BTC. Funding rates also climbed from 0.04% to 0.09%, signaling renewed leveraged long positioning as traders position for a potential year-end move.

While rising leverage can support upside momentum, it also increases fragility if prices fail to follow through, raising the risk of forced liquidations.

Liquidations and Altcoin Weakness

Over the past 24 hours, total crypto liquidations reached approximately $258 million, with long positions accounting for $193 million of the total. Bitcoin and Ethereum led the liquidations with $104 million and $62 million, respectively.

Several altcoins experienced outsized losses. Midnight (NIGHT) fell 17.5%, while pumpfun (PUMP) declined 12.3%, amid legal developments and deteriorating investor sentiment.

ETF Flows and Macro Backdrop

Spot Ethereum ETFs recorded $84.6 million in net inflows on Monday, lifting total assets to $18.2 billion. In contrast, Spot Bitcoin ETFs saw $142 million in net outflows, reducing assets to roughly $115 billion.

Meanwhile, U.S. Treasury yields edged higher ahead of the holiday-shortened week, while tax-loss harvesting and thin liquidity are amplifying short-term volatility. Analysts at QCP Capital noted that such moves often reverse once markets fully reopen in January.

For now, crypto markets appear range-bound, caught between fading leverage, mechanical flows, and competing macro narratives — leaving traders cautious as the year draws to a close.