Market Maker Sounds Alarm: Volatility Persists in Thin Holiday Trading

Wintermute reports repeated sell-offs, with Bitcoin briefly falling below $85,000 last week and Ethereum falling below $3,000 last week.

As 2025 draws to a close, cryptocurrency markets are still volatile, with traders facing hundreds of millions of liquidations every day, despite generally quiet holiday trading.

This persistent instability, characterized by sharp price swings and failed rallies, reflects a market that is still struggling to recover from a historic crash and is now grappling with structural uncertainty heading into the new year.

Heavy liquidations expose vulnerable market structures at the end of the year

According to a recent report from market maker Wintermute, there is downward pressure intensified early last week, when Bitcoin (BTC) briefly fell below $85,000 and Ethereum (ETH) fell below $3,000 before a derivatives-driven selloff took off.

Liquidations were about $600 million on Monday, followed by about $400 million on Wednesday and Thursday, as steep rebounds were quickly sold off.

“Downside moves remain abrupt, but they are becoming more isolated as debt burdens rapidly disappear and capital retreats into the most liquid assets,” the company wrote.

By the end of the week, activity slowed and Bitcoin fell back to the $90,000s, although that level once again proved difficult to maintain.

As CryptoPotato reported on December 23, BTC failed to secure a clean break above $90,000 before retreating towards the high $80,000 range, with daily liquidations still near $250 million. This struggle has put Bitcoin on track for a nearly 24% loss in the fourth quarter, its weakest quarter since 2018, according to Coinglass data.

Wintermute’s internal flow data points to a shrinking market. Buying interest is still focused on BTC and ETH, while institutional demand has been stable since the summer.

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Meanwhile, retail traders appear to be abandoning the smaller tokens and returning to the majors.

“BTC and ETH continue to act as the key risk absorbers as the broader market struggles with supply pressure and limited risk appetite,” Wintermute said.

The company also noted that token mining and excess supply continue to weigh on altcoins.

October’s leverage flush still hangs over sentiment

The choppy conditions are also linked to deeper scars left by a massive sell-off in October. Several analysts have argued that the crash, which wiped more than $12,000 off Bitcoin’s price in a single day, damaged confidence in highly leveraged trading. BTC is down about 7% so far this year and is heading for one of its rare red years despite relatively strong fundamentals.

Wintermute echoed that caution, warning that price discovery is still happening “on the margin via derivatives,” leaving room for sudden air pockets as crowded positions unwind. Additionally, funding rates remain compressed, options markets are pricing broad outcomes, and trading desks are being phased out over the holidays, leaving liquidity tight.

Looking ahead, the market maker expects calmer conditions at the end of the year, with trading within certain ranges unless a clear macro or policy trigger emerges. As institutional involvement continues to grow, the firm warned that near-term moves are likely to be driven more by positioning than conviction, leaving volatility elevated even as activity slows.