Is this the briefest bear market in history? Crucial indicators suggest Bitcoin’s value might exceed $125,000 by April.

The cryptocurrency market is beginning to show initial signs of a recovery in the first quarter as the aftermath of December’s steep sell-off dissipates.

A recent analysis from Coinbase indicates that four fundamental indicators imply the correction was merely a transient interruption instead of a fundamental change. Increased inflows into spot ETFs, a significant decline in systemic leverage, enhanced order book liquidity, and a shift in options sentiment all suggest a market in the process of stabilizing.

Although traders are still exercising caution, these indicators reveal that the ecosystem is considerably less vulnerable than it was a few weeks prior, paving the way for a possible rebound.

Cautious re-risking through ETFs

The foremost and perhaps most apparent sign of changing sentiment is observed in the activity of spot ETFs, which function as the clearest indicator of institutional risk appetite in publicly available data.

In the first trading week of the new year, U.S.-listed spot Bitcoin ETFs posted a performance that was marginally positive overall. This group experienced two days of strong inflows, which were promptly countered by three consecutive days of outflows, culminating in a net gain of approximately $40 million.

Related Reading

Bitcoin ETFs wiped out $1.1 billion in 72 hours as a critical demand metric turned negative

Bitcoin ETFs are facing unprecedented outflows amid macroeconomic challenges and declining demand.

Jan 9, 2026 · Oluwapelumi Adejumo

This volatile flow pattern is hardly indicative of the consistent, unwavering demand that usually supports a significant breakout. Nevertheless, the scale of the inflow over those two days implies that current positioning remains highly tactical.

Conversely, data for Ethereum presents a somewhat more optimistic outlook. In the same period, spot ETH ETFs recorded approximately $200 million in net inflows, sustaining a positive balance even after considering late-week redemptions.

This disparity is noteworthy because ETH often acts as a higher-beta institutional proxy, serving as an avenue for investors seeking to increase risk beyond mere Bitcoin allocations.

The subtleties in these flows narrate the broader context of the current market situation. While the return of capital indicates that institutions are re-engaging, the day-to-day fluctuations in flow data suggest that confidence is still in the process of solidifying.

For a genuine Q1 rebound to occur, the market will likely need to transition from this erratic behavior to several consecutive weeks of net inflows.

The leverage reset

A key factor that can convert standard sell-offs into prolonged market downturns is the ongoing presence of elevated leverage, which can lead to cascading liquidations that “re-break” the market.

Crypto Market Leverage Ratio (Source: Coinbase)

A critical measure for evaluating this vulnerability is systemic leverage, defined as the relationship between futures open interest and market capitalization.

As of early January, Bitcoin’s futures open interest stood at about $62 billion, while its market capitalization was close to $1.8 trillion. This results in an open interest to market cap ratio of approximately 3.4%, a level low enough to support the argument that the market is not currently over-extended.

Ethereum, however, exhibits a different profile. With open interest around $40.3 billion against a market cap of $374 billion, ETH’s ratio is approximately 10.8%.

This indicates the asset’s greater reliance on derivatives and suggests that, while not inherently bearish, ETH rallies could become more precarious if leverage is permitted to rebuild aggressively.

Nevertheless, the fundamental argument remains that the leverage washout in December has established a healthier foundation for price movements.

With speculative excess reduced, the market is theoretically positioned to rise without immediately triggering the kind of liquidation mechanisms that intensified December’s volatility, especially if funding rates stay neutral.

Liquidity and the ‘Clean Slate’

The third cornerstone of the recovery argument is market microstructure, particularly whether order books are sufficiently robust to absorb substantial flows without causing significant price slippage. Following the holiday hiatus, this market “plumbing” is showing signs of enhancement.

Data from Amberdata reveals that Bitcoin’s order book depth within 100 basis points of the mid-price has increased to around $631 million, surpassing the seven-day average.

Importantly, spreads have remained tight, and the balance between buyers and sellers was nearly even, with Bitcoin’s book split roughly 48% bid to 52% ask.

Related Reading

Bitcoin order books just exposed the “wild” mechanics secretly crushing every rally before it starts

Fresh Coinglass data illustrates a market in a chokehold, where “thick layers” of sell-side liquidity are dampening volatility and confining traders within a controlled range.

Dec 30, 2025 · Liam 'Akiba' Wright

This equilibrium is crucial for market stability. In periods of panic, liquidity tends to vanish, and order books become heavily weighted on the ask side, converting every attempted rally into a barrage of selling pressure.

The return to two-way liquidity enhances the likelihood that any upward movement can extend beyond a single trading session.

Additionally, the broader liquidity signal, stablecoin supply, is showing positive signs. According to DeFiLlama data, stablecoin supply is near $307 billion, reflecting an increase of approximately $606 million week-over-week.

While this latest uptick is minor in context, the upward trend aligns with new deployable capital re-entering the ecosystem.

Notably, Binance, the largest cryptocurrency trading platform, has reported net stablecoin inflows exceeding $670 million over the past week.

Monthly Stablecoin Netflow on Binance (Source: CryptoQuant)

Supporting this is the “clean slate” effect observed in the options market. A significant expiry on Dec. 26 cleared a considerable portion of open interest, with Glassnode data indicating that roughly 45% of positions were reset.

This diminishes the risk of previous positioning “pinning” prices.

Moreover, the skew, which represents the premium paid for downside puts versus upside calls, has transitioned from strongly positive to mildly negative. This suggests that traders are shifting away from panic-driven hedging and moving toward upside engagement.

What should we expect from Bitcoin in Q1?

Looking forward, the options market provides a framework for what is being anticipated in the first quarter.

With implied volatility hovering around the mid-40% annualized range, a standard deviation move would place Bitcoin’s expected baseline between $70,000 and $110,000.

Within this range, the analysis outlines three distinct scenarios:

• The Bull Case ($105k–$125k): This scenario posits that ETF flows turn consistently positive for weeks rather than days, and order book depth continues to grow to support substantial spot demand. If skew remains neutral-to-negative and price breaks through the critical dealer “gamma zone,” the rally could gain momentum.
• The Base Case ($85k–$105k): In this case, flows remain mixed and leverage rebuilds gradually. Liquidity improves, but ongoing macro uncertainty limits risk appetite, keeping options “well-priced” without extreme skew.
• The Bear Case ($70k–$85k): In this scenario, ETF outflows continue, liquidity weakens with widening spreads, and skew reverts to positive as traders seek downside protection. A macro shock, such as rising rates or a stronger dollar, would likely trigger deleveraging.

Ultimately, while cryptocurrencies can rally based on their internal dynamics, a sustained Q1 continuation will likely depend on the macroeconomic environment.

Related Reading

Today’s “perfect storm” for Bitcoin brings several critical macro tests that signal a volatility surge – what to watch

Bitcoin’s “stacked catalyst” day is here, with jobs data, a Supreme Court wildcard, and the Fed all coinciding within hours.

Jan 9, 2026 · Liam 'Akiba' Wright

The early-January setup presents asymmetric optionality: the market is less structurally fragile and increasingly receptive to upside.

However, until ETF flows stabilize into a consistent trend and macro conditions cease to introduce volatility, the “reset” remains a promising setup rather than a sure bounce.

The post Shortest bear market ever? Key metrics imply Bitcoin price could surge past $125,000 before April appeared first on CryptoSlate.