05 December 2025

Some weeks in crypto feel like a full-blown existential crisis. This one felt more like the market took a deep breath, stretched a bit, and said alright let’s try that again. Traders who spent the previous week questioning their life choices suddenly had charts turning green, liquidation bots taking a nap, and funding rates behaving like they finally attended therapy.

Bitcoin’s rebound has been the centrepiece of this mood shift. After Monday’s drop spooked even the bravest dip-buyers, the market staged the kind of comeback that reminds us why people stay glued to this asset class in the first place. And with liquidity firming up, macro winds softening, and a handful of bullish headlines sprinkled in, sentiment has turned from why is everything falling to maybe things aren’t so bad.

Last week’s sell-off in crypto has given way to a sharp relief rally. After dipping into the mid‑$80,000s (roughly $84K) on Monday, Bitcoin has bounced back to about $92–$93K by mid‑week. Several factors appear to be driving this reversal. Broadly speaking, crypto traders cite a better liquidity/macro backdrop. This could be a technical squeeze of leveraged shorts, positive crypto-specific news, and renewed accumulation on-chain. The net result is a rebound after the earlier panic. 

Top-3 stories of the week:

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The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $3.13 trillion - UP 0.6%    

• Bitcoin price - $91,944 - UP 0.6%

• The dollar index (DXY) - 98.95 - DOWN 0.7%

• Bitcoin Dominance - 59.32% -  UNCHANGED

• Crypto Fear and Greed Index - 28 - Market is in Fear

THE HOT TAKE

BTC’s Relief Rally:What Really Drove the Rebound

1. Macro Relief: When Bad News Turns “Less Bad”

Macro signals softened this week, lifting risk assets. In the U.S., traders interpreted fresh data and Fed signals as leaning dovish. Key reports (flat U.S. import/export prices) showed minimal inflation surprises, and Fed officials have emphasised that rate cuts are likely by year-end. Fed futures now imply roughly an 87–90% probability of a 25 bp cut on Dec 10. Reflecting this, U.S. Treasury yields have fallen: the 10-year yield dipped to ~4.06% (from ~4.2% last week), and the Dollar Index slipped to its lowest since October. In plain terms, hard data (lower inflation pressures) plus the end of Fed balance-sheet runoff (QT officially ended Dec 1) removed some of the “weight on risk”.

The result: U.S. equity futures and tech stocks rallied on rate-cut optimism.  Locally, similar themes are at play: inflation is easing (thanks to recent GST and food-price moves) and analysts expect the RBI to hold rates steady or gradually pivot dovish in early 2026. Even Monday’s crypto washout to ~$84K was quickly seen as overdone once yields fell, leading to today’s bounce.

2. Positioning Reset: From Over‑leveraged Shorts to Squeeze

Derivatives data show last week’s deleveraging is reversing. In late November many traders were highly short or leveraged; open interest had declined sharply as people piled out of positions (Glassnode notes futures deleveraged “orderly, with little forced liquidation” in November. That left the market with very light net exposure. In practice, this meant a classic short squeeze: when BTC broke above the prior $88K–$90K zone this week, many leveraged shorts quickly exited, pushing prices higher.

Consistent with this, funding rates on major perpetual futures have turned modestly positive. Rather than heavily negative (as often seen in a screaming bear market), the global funding rate is now around +0.01% (longs paying shorts). This is a mild long-bias, indicating renewed bullish bets but not extreme leverage. Open interest (total futures contracts outstanding) has also climbed off its lows. This typically reflects that traders are slowly stepping back in. Meanwhile, options markets remain somewhat defensive: Glassnode notes heavy put demand around strike prices near $84K and relatively thin call buying above $100K. In sum, derivatives have shifted from panic to cautious optimism. The previous overcrowded shorts have been cleaned out, but new positions are being added gingerly. This reset from “max bearish” toward neutral or modestly bullish is a key technical reason for the recent bounce.

3. Narrative Sparks: ETFs, Upgrades and Policy Clarity

Key news items this week have also changed the narrative from “risk-off” to “cautious re-engagement.” On the regulatory front, the U.S. SEC chair announced a forthcoming crypto “innovation exemption,” while major institutions like Vanguard have begun permitting crypto ETF products on their platforms. These signals of a friendlier future stance have calmed fears that regulation might crack down on crypto. In fact, earlier FUD (fear) from the SEC has now been offset by such clarifications. Institutional endorsement is also creeping in, for example, Bank of America said it will allow clients to allocate 1–4% of portfolios to crypto (via regulated ETFs) starting January 2026, and preliminary signs of this (Bitcoin ETF share prices rebounding) were evident this week.

On the protocol side, bullish events helped lift crypto sentiment. Ethereum’s long-awaited “Fusaka” network upgrade went live on December 3. This aims to improve speed and efficiency. ETH has also jumped over 4% on the day of the upgrade. Solana likewise had news that its community overwhelmingly approved a major “Alpenglow” consensus overhaul in late November. Talks of that may have helped Solana’s rally this week. In contrast, no new major hacks or scandals came to light. Overall, the headlines shifted from negative (e.g. ETF outflows in Nov) to neutral/positive. 

What Comes Next?

1. Bullish Path — If Liquidity Holds and Data Cooperates

In a bullish scenario, the current rebound evolves into a sustained rally driven by continued macro tailwinds: U.S. rates and Treasury yields keep falling, reinforcing expectations of Fed cuts, while a weaker dollar supports risk assets. Given estimates that every 10 bp drop in the 10-year yield can add roughly $2,000 to Bitcoin, a slide toward 3.5–4.0% could propel BTC into the mid-$90Ks or higher, especially if the Fed formally cuts in December and institutional flows remain strong (as seen in ETH’s recent $140M ETF inflow). A break above the $94–98K resistance zone could open the path to $100K, with ETH, SOL, ADA and other large caps rallying alongside improving technicals. This means healthier funding, rising open interest, and easing on-chain losses, potentially pushing total market cap above $3.5–4 trillion.

2. Bearish Path —  If Macro or Policy Turns Hostile Again

In a bearish scenario, stronger-than-expected U.S. data, such as upside surprises in payrolls or inflation, could erase Fed-cut hopes. This could also push Treasury yields sharply higher, and lift the dollar, with every 10 bp rise in the 10-year yield potentially dragging Bitcoin by ~$2,000. A spike back above ~4.5% on the 10-year and a DXY move toward 100 would likely flip crypto sentiment back to fear. This may reverse the current squeeze as shorts re-enter, funding turns negative, and liquidations cascade. Under this path, BTC could retest $84–88K, ETH and alts would fall harder, and total market cap could slide toward $2.7–3 trillion, with Indian traders also hit by rupee pressure, FII outflows, and possibly stricter domestic scrutiny. The key warning signals would be yields breaking above 4.5%, hawkish Fed commentary, negative funding, rising exchange inflows, red ETF flows, and a rise in classic risk-off markers like gold strength or a VIX spike.

3. Base Case —  A Choppy, Range-Bound Market for Now

In a base-case scenario, the market likely settles into a choppy, sideways range, roughly $88–95K for Bitcoin, as mixed macro cues keep sentiment undecided. Gains and pullbacks would arrive in bursts as data drops, with traders watching whether BTC can convincingly break above ~$94–95K to signal an emerging uptrend or slip below ~$88K to revive the downtrend. The key indicators here are range-break signals. Steady Fed cut odds around 80–90% (neutral), funding rates hovering near zero (indecision), and balanced on-chain flows where modest outflows indicate dip-buying, and inflows hint at caution. Short-term holder profitability around 1× would reinforce neutrality, with moves above or below that level flagging profit-taking or potential bullish positioning. 

Final Takeaway

This week’s rebound tells us that crypto remains a liquidity- and sentiment-driven market. When macro conditions “turn less bad”- slower inflation, an end to QT and chatter of rate cuts, crypto prices can rally quickly. The rapid flip from panic (on 10/31) to relief shows how fragile the uptrend still is. We are likely in an early regrouping phase: shorts have been washed out, and important technical levels have held or resumed support. But on-chain metrics suggest we haven’t entered a broad buying frenzy yet. Liquidity is still relatively thin, and many short-term traders remain underwater. In effect, this rebound confirms that the market is transitioning from bearish capitulation into a tentative recovery. But it has not yet broken out of its multi-month base. The interplay of Fed policy, funding positions, and institutional flows – all of which we have outlined- will determine if this phase becomes a sustained uptrend or simply a volatile pause.

Above all, humility is key. No one can call the exact top or bottom. Instead, think of this as a regime – a regime of cautiously returning risk appetite. Focus on watching the data flow: process matters more than predictions. Keep time horizons in view (crypto tends to trend over weeks/months, not hours), manage risk, and accept that sharp swings are the norm. The goal is not to “nail” the next rally, but to navigate it with discipline. As always, prepare for both outcomes and remember that steady, data-driven strategies will serve you better than chasing FOMO or fear. The market cycle will reveal itself in time – our job is to stay ready, not get caught up in noise.

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Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.