Daily Crypto Signals: Bitcoin Holds Above $85K Amid ETF Outflows, XRP Struggles at $2 Support
Bitcoin maintained support above $85,000 despite $358 million in ETF outflows and a 31% decline from its all-time high, with institutional
Quick overview
- Bitcoin remains resilient above $85,000 despite significant ETF outflows and a 31% drop from its all-time high, indicating sustained institutional confidence.
- XRP is facing considerable downside risk near the $2 mark, with a dramatic 96% decline in Binance's futures volume and persistent selling pressure across all wallet sizes.
- Recent regulatory developments in the US and UK aim to enhance institutional adoption of digital currencies, with proposed regulations allowing banks to issue payment stablecoins.
- The SEC is reevaluating its stance on blockchain privacy tools, emphasizing the need for balance to prevent cryptocurrency from becoming a powerful surveillance tool.
Bitcoin BTC/USD maintained support above $85,000 despite $358 million in ETF outflows and a 31% decline from its all-time high, with institutional metrics suggesting investor confidence remains intact despite short-term pressure. Meanwhile, XRP XRP/USD faces significant downside risk near the $2 level as futures volume on Binance collapsed by 96% and broad-based selling pressure persists across all wallet sizes through December.
Crypto Market Developments
This week saw major market and regulatory changes in the cryptocurrency space as US and UK authorities advanced new frameworks for digital assets. A significant step toward the widespread institutional adoption of digital currencies was taken when the Federal Deposit Insurance Corporation proposed regulations under the GENIUS Act that would let licensed banks to issue payment stablecoins through subsidiary structures. Feedback on the extensive consultations on crypto rules that span trading platforms, staking, lending, and decentralized finance was opened until February 2026 by the UK’s Financial Conduct Authority.
Executives from the cryptocurrency sector met with the Securities and Exchange Commission during its sixth roundtable on the subject, calling for regulators to reevaluate their position on blockchain privacy tools in a significant change in regulatory tone. Acknowledging the need for balance, SEC Chair Paul Atkins cautioned that cryptocurrency might develop into “the most powerful financial surveillance architecture ever invented” in the absence of adequate protections. Industry representatives stressed that users shouldn’t be inherently suspicious of privacy technologies because they have useful uses outside of illegal activity.
Bitcoin Reclaims $87,000
Despite declining institutional flows through spot exchange-traded funds, Bitcoin showed tenacity by gaining 3% on Tuesday after selling off to the $85,000 level. Following the breach of the psychological $90,000 support level, the spot Bitcoin ETFs had net outflows of $358 million on Monday, the biggest daily withdrawal in more than three weeks, which fueled speculation about decreased institutional exposure. The drop in Bitcoin’s price, which is currently 31% below its peak of $126,219, has prompted speculation over whether the bullish wave that lasted until October is over.
Deeper research, however, indicates that despite the drop, institutional investors have not given up on Bitcoin. Since May, the cryptocurrency’s 60-day correlation with gold has fluctuated between positive and negative, demonstrating both the lack of consistency in price patterns and the fact that the recent 31% decline had no effect on the correlation indicator. This undermines claims that institutional investors’ risk assessment of Bitcoin as a store of value has changed significantly. Over the last 18 months, Bitcoin has beaten the S&P 500 index by 7%, and its options risk profile closely resembles that of IT behemoths Nvidia and Broadcom, two of the top eight firms in the world by market capitalization.
The implied volatility indicators for bitcoin show that market activity is still in line with historical trends. The implied volatility of 3-month options, which peaked in November at 53%, is currently at levels similar to those of Tesla, indicating that traders may expect significant price changes without necessarily becoming bearish. Market observers point out that rather than a fundamental shift in trends, Bitcoin’s slump is a result of the Federal Reserve’s prolonged balance sheet reduction and postponed interest rate decreases. The benefits of recent Fed liquidity injections have not yet been reflected in markets, and rotation into riskier assets has not yet occurred because institutional capital has mostly entered through ETFs and corporate reserves.
XRP Faces Downward Pressure Under $2
As derivatives activity continues to decline throughout December, XRP is under intense downward pressure. The cryptocurrency is currently trading close to crucial technical support at $2.00. Binance’s futures taker buy volume fell from over $5.8 billion in July to under $250 million, a startling 96% drop that indicates a sharp reduction in buying pressure. For the most of this time, the taker buy-sell ratio has stayed negative, suggesting that sellers have continuously controlled the flow of XRP derivatives and that even optimism about ETFs hasn’t significantly increased demand.
Due to traders actively reducing or closing leveraged positions in response to the extended market collapse, XRP’s estimated leverage ratio has dropped to roughly 0.18, one of the lowest readings of the current cycle. Lower leverage indicates a transitional stage where markets rebalance before forming more distinct directional trends, but it also shows muted speculative interest and lowers the potential of cascading liquidations. Widespread risk-off positioning among XRP traders is suggested by this deleveraging scenario.
All participant classes had widespread selling pressure during December, according to onchain statistics. Retail wallets recorded a negative $8.68 million, mid-size wallets a negative $6.89 million, and large wallets a negative $34 million, according to cumulative volume delta. No cohort showed consistent buying pressure. On December 11, a wallet that had held XRP for five to seven years with a cost basis of $0.40 made almost $721.5 million in profit close to the $2.00 level, marking a big distribution event. Unless liquidity circumstances significantly improve in the upcoming weeks, XRP is still susceptible to further declines in this low-demand, low-leverage scenario, according to these measurements.
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