Bitcoin Holds Near $87,500 as Year-End Rebalancing Hopes Offset Cautious Crypto Sentiment

Bitcoin price action steadied during U.S. afternoon trading after an active morning, with BTC holding near the $87,500 level and maintaining gains of roughly 2% over the past 24 hours. The stabilization comes as the broader cryptocurrency market shows modest strength, with major altcoins like Ethereum (ETH), XRP, and Solana (SOL) also posting similar upside moves. Despite the rebound, overall market sentiment remains cautious as traders look for a clear catalyst to drive the next directional move.

Crypto-related stocks mirrored the recovery after Monday’s sharp sell-off. Strategy (MSTR) rebounded by around 3%, while Coinbase (COIN) gained approximately 1%, signaling renewed but tentative confidence among equity investors tied to digital assets. Market participants appear willing to defend current price levels, but risk appetite remains subdued as the year draws to a close.

According to Josh Barkhordar, head of sales at FalconX, clients are positioned with “cautious optimism,” expecting bitcoin and the broader crypto market to remain range-bound in the near term. Many investors are maintaining core bitcoin exposure while holding excess cash on the sidelines until a stronger macro or crypto-specific catalyst emerges.

Looking ahead, bitcoin could benefit from year-end portfolio rebalancing, noted Vetle Lunde, head of research at K33. BTC has significantly underperformed the S&P 500 during the fourth quarter, lagging equities by roughly 26%. Historically, similar periods of underperformance have preceded inflows as asset managers rebalance portfolios to meet predetermined allocation targets. This dynamic could result in increased demand for bitcoin in the final trading days of the year and into early January.

However, despite the price stability, crypto traders remain hesitant. CME bitcoin futures open interest is hovering near yearly lows, while perpetual swap funding rates remain close to neutral, indicating limited short-term conviction. Spot crypto trading volumes are also down about 12%, reinforcing the view that many investors are choosing to stay on the sidelines. As a result, while bitcoin holds firm near key levels, the market remains in wait-and-see mode heading into year-end.