Bitcoin's December: Narrow Market and On-Chain Signal Check

Order Book Weakness and Market Fragility

Currently, Bitcoin (BTC) is trading around $90.43K, but this figure is not just about the price; it’s insufficient to understand the underlying market structure. After significant liquidations in recent months, market makers and major players have sharply reduced their risk capital. The direct result: a concerning decline in order book depth on exchanges.

Such thin liquidity means the market has become highly sensitive to any small sell or buy order. Where previously there were enough bid-ask spreads to absorb large orders, now even minor movements can rapidly push prices up or down. This signals “late-cycle weakness” — where a lack of buyers after a price decline and limited market depth can quickly increase volatility.

On-Chain Data: Selling Pressure Easing

A key indicator is the 90-day Spot Taker CVD, which tracks aggressive market orders on spot exchanges. In recent months, this metric has shown an interesting shift: from persistent selling to a move toward neutrality. This doesn’t mean heavy buying has started, but it indicates that sellers are no longer fiercely competing.

Funding rates and open interest are also resetting in parallel, confirming that leverage is moderate. This stability can be a positive sign, but it’s not yet a strong buy signal — just a market pause.

Hidden Risks in Lending and Collateral

An intriguing development on crypto lending platforms: users are borrowing by putting up Bitcoin as collateral instead of selling. This artificially reduces selling pressure and adds some stability. But there’s a hidden risk: if prices fall further, these collateralized positions could face margin calls, leading to forced liquidations.

When the order book is already thin, such liquidations can trigger a new wave of selling. It can create a vicious cycle: price drops → liquidations occur → more selling → prices fall further.

Market Reality in 2025 Context

This year, the crypto market has taken a complex journey. ETFs and institutional investments have opened new liquidity channels, but mid-year, tight monetary policy and high interest rates kept risk assets under pressure. Now, at year-end, potential easing signals (such as a decline in inflation or rate cuts) could attract markets higher.

Key points to watch:

• ETF flows are now decisive: Large inflows or outflows can immediately impact price levels, especially in thin liquidity.
• Institutional infrastructure has improved: Custody infrastructure and regulatory clarity have increased institutional participation, but this doesn’t guarantee long-term liquidity improvements.
• Leverage reduction has lowered short-term risk: But markets can still react sharply to any major macro shock.

Possible Scenarios for December

Bullish scenario: If central banks adopt a dovish stance (rate cuts or signals of increased liquidity), rapid buying in the thin book could lead to double-digit recoveries. New ETF flows and spot buying could tilt the chain toward a bullish balance.

Bearish scenario: Unexpected economic shocks (bad data releases or systemic crises) could spook investors, triggering renewed leverage cuts. Widespread margin calls on collateralized positions could lead to forced selling and larger downside moves.

Practical Tips for Traders

In this fragile market structure, the following may help:

• Limit position sizes: Large orders in thin books can disproportionately shake the market.
• Regularly monitor on-chain indicators: Keep an eye on funding rates, open interest, and Spot Taker CVD daily.
• Assess collateral-based risks: If using lending platforms, understand liquidation thresholds and margin call policies.
• Watch macro calendar events: Track Federal Reserve decisions, CPI/PMI data, and key economic releases.
• Have an exit plan ready: Predefine stop-losses and scaling-out strategies — discipline is your best defense in sudden volatility.

Conclusion

Bitcoin’s December could see big moves, but direction will depend heavily on macro signals and ETF-spot flows. On-chain data shows reduced aggressive selling and some market stabilization. However, limited liquidity and collateral-based risks mean even small triggers can cause large market swings.

Remaining vigilant and practicing clear risk management is essential now. Those who regularly track market structure and on-chain signals will be better positioned to capitalize on upcoming opportunities.