Bitcoin, Ethereum Year-End Calm Leaves Crypto Vulnerable To January Shock, Says Analyst

10x Research said the odds are beginning to tilt slightly toward a bullish break out of Bitcoin’s January downtrend.

• 10x Research noted that crypto trading activity has slowed sharply into year-end, with spot volumes for Bitcoin and Ethereum near cycle lows.
• It added that leverage remains in the system, becoming concentrated among fewer traders.
• The firm warned that thin liquidity could amplify price moves when participation returns in January.

Crypto markets are ending the year quietly, but that calm may be hiding growing stress under the surface, according to research firm 10x Research.

In a note to clients on Sunday, the firm said trading activity across Bitcoin (BTC) and Ethereum (ETH) has slowed to near the lowest levels of the current cycle. At the same time, different parts of the market are sending mixed signals, making prices appear stable even though the structure underneath is weakening.

“ETF flows, stablecoin activity, and futures positioning are no longer aligned,” 10x Research wrote. “The market looks calm on the surface but increasingly fragile underneath.” Despite the muted backdrop, the firm said the odds are beginning to tilt slightly toward a bullish break out of Bitcoin’s January downtrend. However, it still warned that any move is likely to be sharp once it starts.

State Of Crypto Markets

Bitcoin’s price recovered to $90,000 on Monday morning, up nearly 3% in the last 24 hours. On Stocktwits, retail sentiment around the apex cryptocurrency remained in ‘bearish’ territory over the past day, up from ‘extremely bearish’ last week. Chatter stayed at ‘low’ levels.

Meanwhile, Ethereum’s price climbed back above $3,000, rising 2.4% in the last 24 hours. Retail sentiment around the leading altcoin remained in ‘bearish’ territory over the past day as chatter dipped to ‘low’ from ‘normal’ levels. 

The overall cryptocurrency market capitalization rose back above $3 trillion after $80 billion was added in the past 12 hours.

Trading Activity Has Faded Across the Market

According to data cited by 10x Research, overall crypto trading volumes are running about 30% below their long-term average. On Ethereum, gas fees have fallen into the fourth percentile historically, meaning they are lower than roughly 96% of past observations.

In simple terms, fewer traders are active, fewer transactions are happening, and there is less capital moving through the system. That makes prices more sensitive, because it takes less buying or selling to push the market in either direction.

Derivatives Suggest Leverage Is Building Quietly

Despite the lack of spot participation, leverage has not disappeared, 10x Research noted. It said that funding rates have drifted higher even as futures open interest has declined, suggesting risk is becoming concentrated among fewer traders. 

Bitcoin funding rates sit near the middle of their 12-month range, while Ethereum futures positioning remains elevated compared with recent price performance. According to 10x Research, this combination points to a thinner and less stable market structure.

It added that implied volatility for both Bitcoin and Ethereum has dropped sharply into year-end, especially for near-term contracts. That suggests traders are selling volatility and reducing demand for short-term protection.

The firm noted that, historically, similar periods of compressed volatility have often come just before markets break out of long periods of consolidation rather than continue drifting sideways.

With year-end liquidity constraints set to ease and major macro events approaching in January, 10x Research warned that the current calm may not last. In past cycles, the return of liquidity after quiet periods has often brought higher volatility, not stability, the firm said.

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