Crypto markets opened U.S. trading with a modest rally, as Bitcoin (BTC) climbed back above $89,000 after falling to $87,000 just a day earlier. Data suggests the move is driven more by short-covering than by new long positions entering the market.

Bitcoin’s strength during U.S. hours is notable given a month-long trend of declines in American trading sessions. According to Velo data, BTC has fallen roughly 20% cumulatively during U.S. market hours over the past 30 days. Wednesday’s modest gain came alongside a decline in open interest from 514,000 BTC to 511,000 BTC, per Coinglass, signaling that traders were closing short positions rather than adding new leveraged longs.

Crypto equities—including Coinbase (COIN), Robinhood (HOOD), and Circle (CRCL)—were largely unchanged, mirroring muted moves in the S&P 500 and Nasdaq. Wintermute strategist Jasper de Mare attributed the subdued market to year-end de-risking, record ETF outflows, and thin holiday liquidity.

Major crypto assets remain below key systematic levels, with price movements largely shaped by rollover flows and tax-related positioning. Spot Bitcoin ETFs recorded $19.3 million in net outflows on Monday, marking the seventh consecutive day of redemptions. Mid-December alone saw $1.29 billion withdrawn from Bitcoin funds, including a $157 million single-day outflow from BlackRock’s IBIT. Despite IBIT accumulating $25 billion in inflows year-to-date, December’s rotation appears linked to tax-loss harvesting. Altcoins, which largely fall outside IRS wash-sale rules, have not experienced comparable selling pressure.

Derivatives activity further reflects market caution. Over $27 billion in BTC and ETH options expired on Dec. 26, the largest single-day expiry in crypto history, according to Deribit. Funding rates and open interest, which peaked at $70 billion in June, have steadily declined into year-end.

Bitcoin’s seven-day realized volatility dropped sharply into Dec. 25 but has recently started to rise, driven by volatile intraday swings. De Mare advised traders to avoid over-reliance on short-term signals until institutional flows return in early January.