Bitcoin Dips Below $88,000 Amid Year-End Tax-Loss Selling; Crypto Stocks Suffer Steep Declines
By Krisztian Sandor and Helene Braun | Edited by Stephen Alpher
Published December 23, 2025, 6:38 p.m. | Updated December 23, 2025, 7:48 p.m.
Bitcoin slipped just below the $88,000 mark on Tuesday, marking a decline of a little more than 1% over the past 24 hours. While traditional safe havens like gold, silver, and copper surged to record highs earlier in the day, Bitcoin and other cryptocurrencies faced notable downward pressure, particularly in the digital assets stock sector.
Bitcoin and Crypto Market Performance
Bitcoin’s price movement led the broader cryptocurrency market lower, reflecting cautious investor sentiment as the year draws to a close. Meanwhile, gold, silver, and copper reached their all-time highs before easing slightly in afternoon trading. U.S. equities showed modest gains, with the Nasdaq index advancing 0.45%.
Despite Bitcoin’s relatively modest decline, shares of crypto-related companies suffered far sharper drops, influenced heavily by year-end tax-loss selling and reduced market liquidity. Notably, digital asset treasury companies experienced significant losses. Strategy (MSTR) fell by 4.2%, XXI (XXI) dropped 7.8%, ETHZilla (ETHZ) was down 16%, and Upexi declined 9%. Other crypto firms including Gemini (GEMI), Circle (CRCL), and Bullish (BLSH) each declined by approximately 6%.
Tax-Loss Harvesting and Market Dynamics
Analysts at digital asset hedge fund QCP Capital cited tax-loss harvesting as a key driver behind recent market behavior. This process involves investors selling underperforming assets to realize losses for tax benefits, a common strategy toward year-end when liquidity tends to be scarce.
Paul Howard, senior director at trading firm Wincent, explained, “The end of year typically sees portfolio managers trimming their exposure to risk assets not just with upcoming holidays but also to create taxable events and prepare year-end balance sheets, which in some cases prefer not to show cryptocurrency holdings.”
QCP analysts also highlighted a reduction in open interest for Bitcoin and Ethereum perpetual futures contracts, noting declines of about $3 billion and $2 billion respectively. This decrease in leverage contributes to higher volatility and greater vulnerability to sizable price swings. Moreover, the record-setting options expiration event on Boxing Day, which accounts for over 50% of the total open interest on Deribit, intensifies market sensitivity. While bearish positions have lessened, the persistence of $100,000 Bitcoin call options signals some residual optimism for a potential "Santa rally" in crypto markets.
However, QCP expects these holiday-driven fluctuations to stabilize as liquidity returns in January, potentially leading to a mean reversion in price action.
Outlook for Crypto into 2026
Looking toward the next year, Wincent’s Paul Howard projects a period of market consolidation without any immediate catalyst to reverse the declines from earlier this fall. He remarked, “It will be many months before the asset class can retrace to a $4 trillion market capitalization from the current roughly $2.6 trillion.”
Broader Economic Context
Adding to the market narrative, former U.S. President Donald Trump reiterated demands on his social media platform for the next Federal Reserve chairman to lower interest rates even when the economy is strong. This statement comes amidst reports showing a 4.3% annualized increase in inflation-adjusted gross domestic product for the third quarter, indicating a heating economy.
Trump criticized current market behavior, stating, “In the old days, when there was good news, the Market went up. Nowadays, when there is good news, the Market goes down, because everybody thinks interest rates will be immediately lifted to take care of ‘potential’ inflation.” While major U.S. equity indexes like the S&P 500 and Nasdaq rose on Tuesday, inflation concerns and limited rate cut expectations continue to temper broader investor enthusiasm.
Summary
In summary, Bitcoin and cryptocurrency-related stocks faced downward pressure in late December owing largely to tax-loss selling, thin liquidity, and market positioning heading into the new year. While some optimistic signs persist, significant recovery is unlikely until trading volumes improve in January. Meanwhile, macroeconomic factors, including monetary policy debates and economic growth data, continue to influence digital assets’ performance relative to traditional markets and safe-haven assets like gold.
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