Following a dynamic morning, bitcoin remained stable in the $87,500 range during U.S. afternoon trading, maintaining gains of approximately 2% over the last day. Other altcoins, such as ether , and solana exhibited similar upward trends.
Cryptocurrency-related stocks also experienced rebounds after Monday’s drop, with Strategy (MSTR) increasing by 3% and Coinbase (COIN) rising by 1%.
Read more: Bitcoin rebounds from Monday’s lowest points, but a drop below $80,000 may be imminent, analysts warn
“Clients are maintaining a cautiously optimistic stance,” stated Josh Barkhoarder, FalconX’s head of sales. “In the short term, most anticipate that crypto will remain within a certain range until a definitive catalyst emerges, thus, they are keeping core bitcoin holdings while holding cash elsewhere.”
Analysts suggest BTC could gain from rebalancing
As the year draws to a close, bitcoin might benefit from its lackluster performance compared to other asset classes throughout the quarter, according to Vetle Lunde, research head at K33, as assets managers rebalance their portfolios to maintain their required allocations.
Earlier this year, following BTC’s underperformance against the S&P 500 index in the first quarter, it saw gains at the start of the next quarter, Lunde noted. In contrast, when BTC outperformed equities in the second quarter, it faced declines in early third quarter.
In the fourth quarter to date, bitcoin has fallen behind the S&P 500 by a staggering 26%, indicating significant rebalancing may be necessary.
“Fund managers with fixed BTC allocation targets might adjust their weights as the year ends, potentially leading to significant inflows during the year’s final trading days and into early January,” Lunde added.
Crypto traders remain cautious
Despite prices stabilizing, market participants continue to be wary about assuming new risks, according to K33’s Lunde.
Derivatives trading on the Chicago Mercantile Exchange (CME) is near yearly lows, with BTC futures open interest lingering around 124,000 BTC, he noted. In perpetual swap markets, funding rates are around the neutral level, with open interest showing minimal change, which suggests a lack of short-term directional confidence.
Declining spot crypto trading volumes, down 12% last week, further indicate that many traders are hesitant to engage as the year comes to a close.
