Should you buy BTC and ETH during the holiday dip?

As of Friday, December 26, 2025 (08:17 UTC) Bitcoin (BTC) is around $88,658 and Ethereum (ETH) is around $2,962.

 

If that feels lower than the headlines you remember from earlier in the cycle, you are not imagining it. Since December 21, three forces have been stacking on top of each other:

• Liquidity narratives: Rate cuts already happened, but the next move is getting debated

• Policy narratives: Reform headlines, but not every "win" is fully delivered yet

• Microstructure realities: Holiday-thin depth plus a massive year-end derivatives reset

The core question is not whether digital assets are "good" or "bad". It is whether this specific week is offering a clean dip, or a messy one.

 

What changed this week (Dec 21 to 26)

1. The liquidity backdrop is easing, but not on autopilot

2025 has been a broad easing year globally.

 

Earlier this month, the Fed lowered its policy rate range by 25bps to 3.50% to 3.75%, and signaled it would stay data-dependent about what comes next.

 

But within the Fed, the tone is not "cut forever". A Reuters report this week highlighted Cleveland Fed President Beth Hammack signaling a case for holding rates steady for months, emphasizing inflation risks.

 

Globally, major central banks across the most traded currencies cut interest rates 32 times in 2025, totaling 850bps of easing. Why this matters is because easier policy supports risk appetite, but mixed guidance can also keep markets choppy when positioning is crowded.

2. ETFs turned into a short-term headwind into the holidays

In late December, spot Exchange Traded Fund (ETF) flows often reflect calendar behavior more than a fresh change in belief. Some rebalancing, realizing gains or losses, and reducing risks are expected when desks are lightly staffed.

This week's reporting pointed to outflows in both BTC and ETH spot ETFs heading into Christmas, fitting that year-end de-risking pattern.

3. Policy headlines got more detailed, not just louder

This week's Washington story is less about a single dramatic vote and more about the plumbing being rebuilt.

 

Three developments matter most:

• A new crypto tax framework draft is on the table. A bipartisan proposal known as the PARITY Act has been reported as aiming to modernize digital asset tax treatment, and this includes applying wash sale style rules to digital assets. Simultaneously, the proposal offers targeted relief for areas like staking and stablecoin use cases.

• Market structure work is moving through the Senate. A Senate Agriculture Committee discussion draft builds on the House-passed CLARITY Act and leans toward clearer definitions for digital commodities, with the CFTC positioned for spot market oversight for qualifying assets. It also outlines registration categories and customer protection requirements that would shape how venues and intermediaries operate.
  
  

• Stablecoin rules are tightening, and the loophole fight is real. Bank trade groups have pushed lawmakers to close a perceived gap where issuers may be barred from paying yield under the GENIUS Act, but affiliates or platforms could still offer rewards. This debate matters because stablecoins are the payment rail of the market, and changing how rewards work can shift where cash sits.
  
  

Case 1: The bull case for buying the dip

2025 delivered easing, which changes the backdrop

Markets tend to breathe easier when borrowing costs are falling.

 

The Fed's latest cut put the policy range at 3.50% to 3.75%, and global easing in 2025 has been unusually broad.

 

That does not guarantee a straight rally, especially in late December. It does make it easier for risk appetite to return once the calendar effects fade.

Policy direction is becoming more legible

Even if legislation takes time, the direction of travel matters. A tax framework proposal and an active Senate market structure draft both signal an effort to move from enforcement-by-headline toward clearer definitions, disclosures, and oversight lanes.

 

For long-term allocators, clarity is not a nice-to-have. It is the difference between being allowed to participate or being forced to watch from the sidelines.

ETF weakness can be seasonal rather than structural

ETF flows can act like a lever in both directions, supporting rallies when inflows surge, and amplifying sell-offs when the exit door gets busy. Late December is exactly when that lever is most likely to swing for reasons that have nothing to do with a sudden fundamental shock.

 

Case 2: The bear case for staying on the sidelines

Year-end liquidity creates traps

Holiday conditions often mean thinner books. When depth is thin, price can travel farther with less volume. That is when dips can overshoot, and rebounds can be sharp but unreliable.

If you only remember the rebound and forget the wick that came first, this week has a way of correcting that.

Rate cuts are not guaranteed

The Fed cut rates earlier this month, but this week's messaging shows a real camp arguing for holding steady for months.

 

When it is uncertain if the next step is another cut, a pause, or something more complicated, the market often trades ranges instead of clean trends.

Policy optimism can cool if timelines slip

Tax and market structure drafts are meaningful, but drafts are also not final rules. If the market prices progress faster than Washington can deliver it, a pullback can happen even while the long-term story improves.

 

Why ETFs might be moving this week

ETF flows are not just sentiment. They are also mechanics.

 

Common late-December drivers include:

• Portfolio rebalancing: Funds trim winners and top up laggards to match year-end targets.

• Tax positioning: Losses or gains are realized, depending on jurisdiction and strategy.

• Risk reduction: Some institutions reduce exposure ahead of holidays because staffing is lighter and gap risk is higher.

This week's reporting around BTC and ETH ETF outflows fits that pattern, highlighting ETF flows as a key amplifier of market moves across 2025.

 

BTC vs ETH: What the dip means for each

BTC dips tend to be about positioning and macro

BTC is still the market's macro barometer: rate expectations, ETF flows, and broad risk appetite often show up here first.

 

That is why ETF flows matter so much for BTC. They create a highly visible on-ramp and off-ramp. When outflows cluster into thin-liquidity weeks, BTC can feel heavier than the broader narrative suggests.

 

If you are evaluating a BTC dip, the questions tend to be:

• Are outflows slowing as the calendar turns?

• Are rates and yields cooperating, or tightening conditions again?

• Is policy clarity improving enough to expand the buyer base in 2026?

ETH dips tend to be about usage expectations and structure

ETH is still a macro-sensitive asset, but it also carries an additional layer: it is the base layer for a lot of on-chain activity,from tokenization experiments to applications that live on top of Ethereum.

 

That means ETH will additionally be influenced by expectations of building and adoption. Regulation can matter in a more detailed way, because market structure rules and definitions can influence how tokens, platforms, and intermediaries are treated.

 

ETFs matter for ETH too, but the 2025 story shows a key nuance: ether ETF flows have been highly concentrated by product, with some products drawing big inflows while others saw outflows.

 

So an ETH dip can reflect a mix of broad de-risking and product-specific flow dynamics, not just a single collective view.

 

If you are evaluating an ETH dip, the questions tend to be:

• Are ether ETF flows stabilizing after holiday de-risking?

• Is policy work clarifying what a commodity-like token is versus a security-like token?

• Are adoption narratives improving, or fading into the background?

   

A simple way to think about your decision this week

Buying a dip makes the most sense when your time horizon is longer than noise. This week is noisy by design.

 

If you want a practical checklist, keep it simple:

• Watch whether ETF outflows cool as the holiday period ends.

• Track Fed messaging for confirmation of a true easing path versus a longer pause.

• Follow whether Washington progress stays concrete, with drafts advancing into markups and rulemaking steps that reduce uncertainty.

This article is purely for educational purposes only, not financial advice.