- Bitcoin Price Expectations: Bitcoin is trading within its current range as ETF fund flows remain weak.

Bitcoin (BTC) is trading around $89,000 on Friday, continuing its sideways fluctuation for nearly three weeks amid market participant hesitation. Institutional demand continues to decline, with spot Bitcoin ETF funds recording slight net outflows for the third consecutive week. Meanwhile, improved liquidity conditions toward the end of the year have helped stabilize overall risk sentiment, keeping Bitcoin's price confined within a narrow trading range for now.

- Institutional Demand Continues to Decline:
Institutional demand for Bitcoin has been decreasing this week. Data from SoSoValue shows that spot Bitcoin ETF funds recorded total net outflows of $12.37 million by Thursday, marking the third weekly outflow since mid-December. If these outflows intensify, Bitcoin's price could undergo a correction.

Weekly chart of net flows for spot Bitcoin ETFs. Source: SoSoValue

- Some Signs of Optimism:
Reuters reported on Thursday that the Federal Reserve Bank of New York's overnight repurchase facility lent a record $74.6 billion to financial firms on the last trading day of 2025, surpassing the previous record of $50.35 billion.

The New York Fed also reported that funds and other eligible firms deposited $106 billion with the bank through the reverse repurchase agreement mechanism, the largest amount since early August. The heavy use of both reverse repurchase operations and the reverse repo mechanism is somewhat related: lenders often reduce their holdings at the end of the year and invest their funds safely with the Federal Reserve, leading to a liquidity shortage for lending and thus increasing direct borrowing from the central bank. This step helps stabilize markets, ease short-term funding pressures, and support a moderate risk appetite.

Meanwhile, the Federal Reserve began purchasing $40 billion worth of Treasury bonds monthly on December 12 to ease short-term funding pressures. This wave of net liquidity injections into financial markets will lower borrowing costs and boost risk appetite, especially in assets like stocks and cryptocurrencies, providing short-term support for Bitcoin.