Photo: Zheltikov Dmitry / Shutterstock
The Bitcoin price is hovering around a key level as traders look toward the end of the year. A recent analysis from Coinbase suggests a so-called Santa Claus rally could be on the cards.The reason lies primarily in declining leverage positions in the market. This is relevant for investors, as lower leverage often coincides with more stable price action.
Why Analysts Are Talking About a Potential Christmas Rally #
The analysis points to decreasing leverage positions among large players. Less debt financing in derivatives markets reduces the risk of forced liquidations.
In previous years, extra pressure arose when positions were too heavy. Now, the situation appears calmer, allowing natural demand to have more influence on the Bitcoin price.
A rocky November may have set the stage for a December to remember.
Positioning reset in November:
• Open interest across BTC/ETH/SOL perps was down 16% MoM
• U.S. spot ETFs saw $3.5B $BTC and $1.4B $ETH in outflows
• BTC perp funding rates dropped 2σ below their 90-day… pic.twitter.com/qApZFuMF2X— Coinbase Institutional 🛡️ (@CoinbaseInsto) December 9, 2025
After a turbulent November, much of the speculative leverage has disappeared from the market. As a result, the market structure heading into December looks significantly healthier, says Coinbase.
Additionally, spot volumes remain reasonably solid. Investors buying bitcoin directly are making their mark on the order book. This presents a different picture than a market that relies mainly on futures.
The combination of lower leverage and stable demand fuels the idea that there is room for an upward movement towards the holidays.
Impact on Market Sentiment and Trader Behavior #
Market sentiment appears cautiously optimistic. Short-term traders are watching key price levels and liquidity zones.
They are paying attention to moments when larger buy orders appear. Especially around psychological boundaries, order books often fill up quickly. This pattern plays a role in the current discussion about a Christmas boost.
Institutional players are mainly following the balance between the spot and derivatives markets. A healthier structure with less extreme leverage positions is considered favorable for the longer term.
It reduces the likelihood of sudden drops due to liquidation cascades. This makes some investors feel more comfortable with a higher allocation of Bitcoin in their portfolio.
Outlook for Bitcoin and the Broader Crypto Market #
In the coming weeks, the sector will focus on macroeconomic signals and liquidity data. Interest rate expectations and central bank policies remain important for risk assets.
A more favorable environment for growth stocks often gives additional room to digital assets. At the same time, traders remain alert to unexpected shocks.
Whether a pronounced Christmas movement actually materializes will only become clear from price action around the end of the year. For now, the declining leverage points to a market with less tension in derivatives.
This creates a basis for a more stable trajectory for the Bitcoin price. The crypto sector is closely monitoring this process heading into the final trading weeks of the year.