Bitcoin and Ethereum’s Post-Christmas Recovery Struggles as Market Sentiment Stabilizes

Bitcoin’s recent attempt to rebound past $90,000 following Christmas has lost momentum, with prices slipping back below $87,000 as market sentiment shifts from extreme negativity to cautious neutrality.

Key Takeaways

Bitcoin's short recovery above $90,000 has faded, with prices dropping back below $87,000.
Market sentiment shifted from extreme negativity to cautious neutrality without driving significant buying activity.
Sentiment did not turn bullish; traders are adopting a more cautious approach.
Price actions of Bitcoin and Ethereum indicate ongoing consolidation rather than recovery.
A potential breakout or clear direction may require external catalysts, with ongoing volatility expected in the short term.

Bitcoin and Ethereum's post-Christmas bounce fades as sentiment normalises

Data from Santiment reveals that Bitcoin’s late December rally was accompanied by a significant rise in negative social sentiment, a trend often seen in short-term reversal scenarios. However, unlike past instances where fear subsided leading to a sustained increase in price, this rally fizzled out almost immediately as sentiment began to stabilize.

Instead of prompting renewed buying interest, the shift from fear has led to consolidation and uncertainty in the market.

Market Sentiment Shifts Without Price Follow-Through

The Santiment chart illustrates a familiar trend; Bitcoin experienced a rally during a time dominated by fear, uncertainty, and doubt on social media. However, as sentiment normalized to neutral, the momentum waned. This indicates that the rally was less about strong buying interest and more about short covering and tactical strategies.

Bitcoin and ethereum sentiment trend chart

Source: Santiment

Importantly, sentiment did not shift towards a bullish outlook; instead, it stabilized, suggesting that traders opted to remain cautious rather than actively participating in the recovery. This hesitation has left Bitcoin devoid of a clear direction.

Ethereum reflected a similar, yet slightly lagged, pattern. The sentiment surrounding ETH improved during the price bounce, briefly outperforming Bitcoin. However, this optimism has faded, with sentiment now leaning slightly bearish as prices fail to break past essential resistance levels.

Price Trends Indicate Compression, Not Recovery

The 12-hour Bitcoin chart supports the sentiment data’s message. Prices have settled into a broader downward trend characterized by lower highs, compressing within a narrowing range around the mid-$80,000 level.

Bitcoin 12-hour price trend chart

Source: TradingView

Despite several attempts, Bitcoin has struggled to maintain a break above the descending trend resistance. With each bounce meeting selling pressure, it signifies that supply remains active, even though the downward momentum is slowing.

Ethereum’s chart tells a similar story. While ETH has stabilized above the recent lows at approximately $2,930, its recovery remains restrained under falling resistance, mirroring Bitcoin's trend confirmation struggles.

Ethereum 12-hour price trend chart

Source: TradingView

Together, these charts suggest a phase of consolidation rather than a reversal.

Transitioning from Reactive Moves to Uncertainty

The key aspect of the current market setup is the absence of escalation. While fear increased and prices bounced, neither trading volume nor sentiment showed enough strength to sustain this movement. Instead, the market seems to be moving from a reactive state into a waiting period.

Historically, lasting recoveries occur when improving sentiment coincides with structural breakouts, yet that synchronization is currently lacking. Moreover, the absence of renewed panic selling indicates the market isn't entering a capitulation phase either.

This scenario places Bitcoin and Ethereum in a familiar state: they have sufficient support to avoid sharp declines but face restrictions due to lingering overhead supply and a lack of participant enthusiasm.

Future Implications for the Market Set-Up

With sentiment remaining neutral and prices compressed, it’s likely that external factors or new positioning will be necessary to break the current range. Until then, we can expect continued short-term volatility without a clear trend direction.

For the time being, the post-Christmas movements serve as a reminder that while fear can trigger price bounces, these gains often revert to consolidation without strong conviction behind them.