Christmas Market "Missed" in the Crypto Market: Liquidity Crisis and the 2026 Breakthrough Battle

While the S&P 500 and gold toast to record highs, Bitcoin stands alone at the $80,000 mark. This scene constitutes the most glaring disconnect in the financial markets at the end of 2025.

Investors' eagerly anticipated "Christmas rally" ultimately failed to cross the invisible bridge between TradFi (traditional finance) and the crypto world. As of December 26, BTC is at $87,724.12, nearly 30% below the October all-time high of $125,000; Ethereum has even fallen below the $3,000 psychological threshold, struggling near its yearly low. Meanwhile, the three major US stock indices hit new closing records, spot gold first surpassed $4,500 per ounce, with an astonishing 70% gain for the year. The stark contrast is truly remarkable.

Liquidity: The "Maverick" that stole Christmas

Who killed this year's crypto Christmas rally? The answer points directly to one keyword: liquidity exhaustion.

In the past week, the global central bank policy landscape has shown an unprecedented rift: the Bank of England unexpectedly cut rates, the European Central Bank held steady, and the Bank of Japan remained committed to rate hikes. This policy divergence is like an unconducted symphony, leaving cross-border capital at a loss. The deadliest blow came from the Federal Reserve—despite CPI data unexpectedly falling (overall 2.7%, core 2.6%), markets fell into doubts about "data distortion." The 43-day government shutdown in October created a statistical vacuum, casting a shadow over this "deflation gift."

But the real killer move is the Fed's continued balance sheet reduction in 2025. While traditional financial markets revel in the residual warmth of quantitative easing, the crypto market is explicitly told: liquidity gates will continue to tighten. It’s like a grand feast where crypto assets are kept outside the door. Traders are increasingly pessimistic about whether interest rates can fall below 3.5% in 2026. This expectation gap is the invisible ceiling preventing BTC from breaking through the $90,000 mark.

The "Identity Crisis" of Digital Gold

Ironically, as spot gold confirms its status as the "safe haven king" with record gains, Bitcoin, dubbed "digital gold," faces a wave of capital withdrawal. Traditional financial institutions choose certainty during the Christmas season—whether it's Apple's stable cash flow or gold's geopolitical hedging properties, both far surpass the high volatility of crypto assets.

This exposes the core dilemma of BTC in the current cycle: the adoption rate among institutions has not offset the macro liquidity contraction. As risk appetite wanes under balance sheet reduction pressure, the crypto market finds itself still trapped within the "high-risk asset" perception framework, rather than truly becoming a safe haven.

2026: Seeking New Highs on the Ruins of Regulation

There is always a glimmer of light at the end of darkness. Delphi Digital co-founder Tom Shaughnessy offers a bold prediction: "In 2026, BTC will rebound strongly like a rubber band, reaching new all-time highs." His reasoning is that the $19 billion market crash in October has thoroughly cleaned out leverage, laying the groundwork for a new rally.

Cathy Yoon, Chief Legal Counsel at Temporal Research, offers a more pragmatic view: "The keyword for 2026 is regulatory implementation. After the stablecoin legislation passes, real change will come from the details—review mechanisms, disclosure rules, payment system integration." This means the crypto market may bid farewell to wild growth and regain institutional trust within a compliant framework.

Conclusion: Sow in despair, harvest in regulation

The absence of the 2025 Christmas rally may be the price of market maturity. When the correlation between TradFi and the crypto world drops to freezing point, it precisely indicates that the latter is shedding dependence and seeking independent valuation logic. Liquidity winter always kills speculators, while builders are busy constructing compliant bridges.

What will BTC's price be in 2026? No one can give an exact number. But one thing is certain: when the rubber band is stretched to its limit, it will either snap or shoot out. Historical experience tells us that the crypto market is never short of dramatic turns.

What are your thoughts on the crypto market in 2026?

• Do you think BTC can break through $150,000? Will Ethereum return to $5,000?

• Is tighter regulation an opportunity or a shackles? Could the stablecoin legislation become a bullish catalyst?

• In the context of ongoing liquidity tightening, would you choose to buy the dip or wait and see?

Feel free to leave your comments and share your views! If this article resonated with you, please like, share with more crypto friends, and follow @CryptoDigger to navigate the next cycle of bull and bear markets!