Bitcoin at critical liquidity crossroads

December 17, 2025

 

Reading time: 5 minutes

Bitcoin near inflection point as BoJ liquidity risk meets miner and whale selling

Key points:

  • Bitcoin is testing critical onchain support as Bank of Japan rate expectations threaten global liquidity and leveraged risk positions.

  • Whale inflows, miner shutdowns in China, and sustained long-term holder distribution are adding to sell-side pressure.

News - Bitcoin is navigating a fragile phase as macro liquidity risks intersect with mounting onchain sell pressure. Analysts describe the market as being at a critical juncture, with price hovering near levels that have historically acted as key inflection points during prior market stress.

A key macro factor in focus is the Bank of Japan. For years, Japan’s ultra-low interest rates supported global risk-taking through the yen carry trade, funneling cheap capital into higher-yielding assets, including cryptocurrencies. 

Even modest rate hikes can disrupt this system, strengthening the yen and prompting rapid de-risking. Bitcoin often feels the impact quickly due to its heavy reliance on leverage and continuous trading.

Sell pressure builds across onchain and mining activity - Onchain data shows Bitcoin trading near its True Market Mean around $81,500, a level CryptoQuant analysts describe as a psychological line in the sand. In the 2022 breakdown cited by CryptoQuant, losing this zone preceded a prolonged drawdown that lasted several months.

Whale behavior has added to the caution. Wallets linked to Matrixport recently transferred 4,000 BTC to Binance, a move commonly associated with selling or hedging activity. At the same time, long-term holder supply has fallen to an eight-month low, marking the third wave of distribution in this cycle and highlighting persistent sell-side pressure.

Miner stress has compounded these dynamics. A renewed crackdown in China’s Xinjiang region forced an estimated 400,000 mining machines offline, cutting global hashrate by roughly 8%. 

The sudden loss of revenue has pushed some miners to sell Bitcoin holdings to cover costs, coinciding with BTC slipping to around $86,000 and breaking below the $90,000 level.

China’s yuan offers a partial offset - China’s strengthening yuan could provide some counterbalance. A firmer currency creates room for stimulus and can contribute to dollar weakness, which has historically supported Bitcoin. Whether this liquidity tailwind can offset tightening risks from Japan and ongoing sell-side flows remains uncertain.

Solana slumps while onchain activity weakens despite quantum security push

Key points:

  • Solana’s onchain activity has slid to six-month lows, with TVL, fees, and memecoin trading volumes all showing sharp declines.

  • The Solana Foundation has launched a quantum-resistant testnet, signaling long-term security progress even as short-term price pressure builds.

News - Solana is facing renewed downside pressure as weakening onchain activity collides with broader market risk-off sentiment, pushing SOL further below key long-term support levels. The token is now trading more than 50% below its September peak near $255, with metrics across the network pointing to reduced demand.

Solana’s total value locked has fallen to around $8.67 billion, down over 34% from its mid-September high. Data shows the decline has been led by liquid staking and core decentralized applications, while network usage has softened across the board. 

Over the past week, Solana’s chain fees dropped 11%, active addresses fell nearly 8%, and transaction counts declined by more than 6%, highlighting slowing activity on the base layer.

Memecoin activity dries up - The downturn has been especially visible in Solana’s once-dominant memecoin sector. Weekly memecoin trading volume on Solana has collapsed by roughly 95% from January highs, falling to about $2.7 billion. 

Prices across major Solana-based memecoins are down double digits from recent peaks, contributing to lower DEX activity and further pressuring SOL demand.

Technical indicators also remain fragile. SOL has broken below a bearish pennant formation, with some traders warning that price could drift into the $90 to $100 range if downside momentum persists. The measured target of the pattern points to a deeper drop toward the mid-$80s if key support levels fail to hold.

Long-term security takes shape - While near-term signals remain cautious, Solana has moved to strengthen its long-term resilience. 

The Solana Foundation recently partnered with Project Eleven to deploy post-quantum digital signatures on a Solana testnet. The pilot demonstrated that end-to-end quantum-resistant transactions are viable using current technology, addressing future cryptographic risks tied to quantum computing.

The contrast underscores a growing divide between Solana’s short-term market pressure and its longer-term focus on infrastructure and security readiness.

Hyperliquid moves to sideline $1B fund while Cantor reframes HYPE’s long-term value

Key points:

  • Hyperliquid has launched a governance vote to formally treat $1 billion worth of Assistance Fund HYPE tokens as permanently inaccessible.

  • Cantor Fitzgerald’s recent coverage frames Hyperliquid as core trading infrastructure, projecting a potential $200 billion valuation over the next decade.

News - Hyperliquid is seeking to clarify its effective token supply through a new governance proposal that would permanently sideline roughly $1 billion worth of HYPE tokens held in the protocol’s Assistance Fund. 

The Hyper Foundation has asked validators to formally recognize these tokens as inaccessible, excluding them from circulating and total supply calculations.

The Assistance Fund is a protocol-level mechanism embedded into Hyperliquid’s layer-1 execution. Trading fees are automatically converted into HYPE tokens and routed to a system address that was intentionally designed without control mechanisms. 

According to the foundation, the funds cannot be accessed without a hard fork. A successful vote would establish binding social consensus that these balances should be treated as burned for governance purposes, even though no tokens are being destroyed.

Supply clarity meets institutional attention - The proposal arrives amid growing institutional focus on Hyperliquid’s fee-driven model. 

In a recent research note, Cantor Fitzgerald highlighted Hyperliquid as a protocol that routes roughly 99% of its trading fees through the Assistance Fund to repurchase HYPE. Cantor estimates the platform has generated about $874 million in fees year-to-date, reinforcing the importance of clear supply treatment as the ecosystem attracts larger capital allocators.

Cantor’s analysis goes further, projecting a long-term path toward a $200 billion market capitalization for HYPE based on $5 billion in annual revenue and a 50x multiple. The firm frames Hyperliquid not as speculative DeFi, but as trading infrastructure comparable to global exchanges.

Growing scale and treasury participation - Hyperliquid’s scale continues to support that thesis. Over the past 30 days, the protocol recorded more than $205 billion in perpetuals trading volume, ranking it among the largest decentralized perps venues. 

Alongside this growth, digital asset treasury companies such as Hyperion DeFi and Hyperliquid Strategies have accumulated significant HYPE holdings, supporting a thesis centered on fee generation and long-term participation.

Bhutan commits 10,000 Bitcoin to fund Gelephu Mindfulness City

Key points:

  • Bhutan has pledged up to 10,000 Bitcoin toward developing Gelephu Mindfulness City, positioning BTC as a long-term national asset.

  • The kingdom plans to preserve capital by avoiding sales, instead exploring collateralization, yield strategies, and long-term holding.

News - Bhutan has unveiled a national Bitcoin Development Pledge that commits up to 10,000 Bitcoin toward the long-term development of Gelephu Mindfulness City, a new economic hub in southern Bhutan. 

The allocation, valued at roughly $860 million to $1 billion based on recent prices, represents one of the largest sovereign uses of Bitcoin for infrastructure development.

Officials framed the move as a strategic use of Bitcoin rather than a speculative bet. The government said any deployment of the assets will prioritize capital preservation, transparency, and long-term stewardship, with final decisions on execution expected in the coming months. 

Options under consideration include collateralization, risk-managed yield strategies, treasury approaches, and intentional long-term holding.

A Bitcoin-backed economic vision - Gelephu Mindfulness City was launched as a special administrative region designed to attract investment across sectors such as finance, tourism, green energy, technology, healthcare, and agriculture. The city offers regulatory flexibility for crypto and fintech firms and forms a central pillar of Bhutan’s broader blockchain strategy.

King Jigme Khesar Namgyel Wangchuck said the initiative is intended to ensure that all Bhutanese citizens are custodians, stakeholders, and beneficiaries of the city’s growth. A new land policy treats landowners as shareholders, allowing citizens across all regions to share in the project’s success.

Mining roots and digital expansion - Bhutan’s Bitcoin strategy builds on years of sovereign mining powered by surplus hydropower, which officials say will continue without increasing environmental impact. The kingdom holds roughly 11,286 BTC in total, placing it among the largest known sovereign holders globally.

Beyond Bitcoin, Bhutan has expanded into crypto-enabled payments for tourism, blockchain-based national digital identity, and the launch of TER, a sovereign-backed gold token. Together, these initiatives position digital assets as a core component of Bhutan’s long-term economic and governance strategy.

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Did you know?

  • Prediction markets exploded into mainstream finance this year - Over the past two years, decentralised and on-chain prediction markets grew roughly 130-fold, with platforms like Kalshi and Polymarket now handling billions in monthly bets on everything from sports to macroeconomic outcomes, a new frontier of crypto-native financial activity.

  • Global regulation flipped the script in 2025 - Instead of enforcement-only crackdowns, major jurisdictions like the U.S., EU, Hong Kong, and the UAE rolled out comprehensive crypto regulatory frameworks in 2025, giving businesses clearer rules and reducing barriers that once hindered innovation.

  • Pakistan’s top crypto regulator is now a global policy face - Under CEO Bilal Bin Saqib, the Pakistan Crypto Council brought in Binance co-founder Changpeng Zhao as a strategic adviser and even announced Pakistan’s first Strategic Bitcoin Reserve in 2025, marking an unexpected policy play for a major emerging market.

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Top 3 coins of the day

Hyperliquid (HYPE)

Key points:

  • HYPE hovered near $27.16 after a mild daily rebound, but broader structure remained bearish with lower highs intact.

  • The Parabolic SAR stayed above price, while Stochastic RSI lifted from oversold levels, signaling only short-term relief.

What you should know:

Hyperliquid traded around $27.16, recovering modestly after recent selling pressure but failing to break its broader downtrend. The Parabolic SAR continued to print above the candles, confirming that bearish control persisted despite the bounce. Meanwhile, the Stochastic RSI rebounded from oversold territory, suggesting a short-lived stabilization rather than a confirmed trend shift. Volume patterns supported this cautious view. Selling spikes dominated prior sessions, while recent green candles formed on relatively lighter participation, pointing to tentative dip-buying instead of strong accumulation. On the catalyst front, sentiment remained mixed. Bitwise’s updated filing for a spot HYPE ETF introduced longer-term institutional optimism, but near-term price action stayed weighed down by a 1.75M HYPE token unlock, which added supply pressure during a fragile market phase. For now, $27 remains the key support to watch, while any recovery attempt faces resistance near the $30–$32 zone unless momentum strengthens.

Virtuals Protocol (VIRTUAL)

Key points:

  • VIRTUAL was last seen trading near $0.73, posting a modest intraday rebound but remaining under broader bearish pressure.

  • The Parabolic SAR stayed above the candles, while the EWO remained deeply negative, confirming sellers retained control despite lighter selling volume.

What you should know: 

VIRTUAL remained under pressure after extending its pullback from the November peak near $1.80, with price stabilising around the $0.72–$0.74 zone at press time. The broader structure stayed bearish, defined by lower highs and lower lows, as buyers struggled to regain control. The Parabolic SAR stayed positioned above the candles, confirming that downside momentum had not fully eased. At the same time, the Elliott Wave Oscillator (EWO) remained firmly negative, with red histogram bars persisting after a brief slowdown earlier in the month, signalling sustained bearish momentum. Volume behaviour added clarity. Heavy selling during the October to early November decline contrasted with lighter participation during recent green candles, indicating cautious dip-buying rather than strong accumulation. Beyond the technical lens, sentiment around Virtuals Protocol stayed mixed. Recent exchange listings and ecosystem updates improved visibility, but failed to spark a decisive trend shift. $0.70 remains the key support, while $0.80–$0.85 is the immediate resistance zone to monitor.

Filecoin (FIL)

Key points:

  • FIL was last seen trading near $1.30, posting a mild recovery after weeks of sustained downside pressure.

  • The Supertrend remained in sell mode, while the EWO stayed negative, reflecting persistent bearish momentum.

What you should know:

FIL’s price action stayed negative after failing to hold its early November breakout above $3.50. The Supertrend continued to trail above price, confirming that the broader trend stayed bearish despite the recent bounce. Meanwhile, the EWO remained deeply negative, signaling that downside momentum had not fully reset. Volume surged sharply during the November spike and subsequent breakdown, but participation cooled in recent sessions, suggesting fading conviction from both buyers and sellers. On the macro side, broader market weakness continued to weigh on altcoins, keeping risk appetite subdued. At the same time, Filecoin’s role in decentralized storage and AI infrastructure narratives helped limit deeper losses, offering longer-term support. For now, support sits near $1.20–$1.25, while resistance remains around $1.45–$1.55. Holding above support is key to avoiding further downside.

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