Bitcoin edges higher to surpass $89,000, signaling an uncommon rally in U.S. trading.

Bitcoin (BTC) reclaimed the $89,000 level in early U.S. trading on Wednesday, recovering from a dip to $87,000 the previous day. Market data indicates the move is primarily driven by short-covering rather than fresh long positions.

The rally marks a rare shift in U.S. trading patterns. Over the past month, Bitcoin has fallen roughly 20% cumulatively during American trading hours, according to Velo data. Coinglass data shows BTC open interest declined from 514,000 to 511,000 since the U.S. market opened, confirming that traders are closing short positions instead of adding new leveraged longs.

Crypto-related stocks, including Coinbase (COIN), Robinhood (HOOD), and Circle (CRCL), were largely flat, mirroring muted moves in the S&P 500 and Nasdaq. Wintermute strategist Jasper de Mare cited year-end de-risking, record ETF outflows, and thin holiday liquidity as factors keeping markets subdued.

All major crypto assets remain below key systematic levels, with price action shaped by rollover flows and tax-related positioning. Spot Bitcoin ETFs saw $19.3 million in net outflows on Monday, marking seven consecutive days of redemptions. Mid-December outflows totaled $1.29 billion, including $157 million from BlackRock’s IBIT. While IBIT has accumulated $25 billion in inflows year-to-date, December’s withdrawals appear linked to tax-loss harvesting. Altcoins, largely exempt from IRS wash-sale rules, have not faced similar selling pressure.

Derivatives markets also reflected caution, with over $27 billion in BTC and ETH options expiring on Dec. 26—the largest single-day expiry in crypto history, per Deribit. Funding rates and open interest, which peaked at $70 billion in June, have steadily declined heading into year-end.

Bitcoin’s seven-day realized volatility fell sharply through Dec. 25 but has begun picking up again amid erratic intraday swings. De Mare advised traders to avoid over-reliance on short-term signals until institutional flows resume in early January.