Bitcoin’s $90K Breakout Reverses to $85K as ‘Santa Rally’ Bets Collapse

Bitcoin’s sprint to $90,000 early Wednesday lasted just long enough to invite “Santa rally” chatter—then the bid evaporated. By midday, BTC was trading at $85,921, down 2% on the day per CoinGecko, after printing an intraday low of $85,373. Roughly $155 million in Bitcoin derivatives were liquidated over 24 hours, according to CoinGlass, underscoring how crowded leverage turns a brief breakout into a sharp reversal.

The pullback reverberated across majors. Ethereum slipped 4% to $2,824 after briefly reclaiming $3,000, and it’s now off 16% over the past week—leading losses among the top 10 by market cap. Flows didn’t help: U.S. spot Bitcoin ETFs posted two straight days of redemptions and are down $634 million week to date, per Farside Investors.

Traders are also recalibrating odds as macro variables stack up. On prediction platform Myriad, the probability that Bitcoin tags $100,000 before revisiting $69,000 fell from about 69% to 57% in a day, while the chance of a seasonal Santa rally sits under 4%. Two months of U.S. labor data from the Bureau of Labor Statistics showed unemployment rising to the highest level since 2021, and markets are bracing for a Bank of Japan rate increase on Friday that could destabilize the yen carry trade—an important source of global liquidity that often supports risk assets like Bitcoin.

The single variable to watch here is liquidity. Narratives around holiday seasonality are fun, but they rarely withstand a tightening impulse. If the BOJ does lift rates, even modestly, the mechanics are straightforward: a stronger yen pressures carry positions, reduces synthetic dollar liquidity, and dampens cross-asset beta. In crypto, that manifests first where leverage is most reflexive—perps and options—amplifying moves around round-number levels like $90K and $100K. That reflexivity showed up today in the $155 million liquidated and the swift repricing on Myriad.

ETF flow is the other tell. Many allocators treat spot ETFs as a clean signal of net demand; two sessions of outflows totaling $634 million is not catastrophic, but it does say that large accounts are trimming risk into macro uncertainty. That behavior tends to compress upside tails until a new inflow impulse arrives. Meanwhile, retail tends to anchor to price milestones—$90K, $100K—which can produce late-cycle chase behavior during thin liquidity hours and then sharp pullbacks when headline risk hits.

Not everyone expects fireworks from Tokyo. Bitwise CIO Matt Hougan has argued a BOJ hike is widely anticipated and should be largely priced, though he acknowledged the optics—Japanese rates at a multi-decade high—could trigger short-term selling as traders react to the headline. That stance is sensible: the immediate effect may be more about positioning and psychology than fundamentals, but in a market leaning long, that’s enough.

Key tells over the next 72 hours: BOJ policy language, yen strength versus the dollar, whether ETF flow flips positive, options skew around $90K–$100K, and whether perp funding cools. If liquidity stabilizes, the path to $100K remains open—even if prediction markets marked it down to 57%. If BOJ headlines bite and ETF outflows persist, expect chop with a downside bias and continued stress at leverage points. Either way, the trade right now is less about holiday lore and more about who supplies dollars to the bid.