Geopolitical tensions ease! The crypto market welcomes a delayed "Christmas rebound": Bitcoin breaks through $90,000, Ethereum reclaims $3000

As 2025 draws to a close, the crypto market has experienced a long-awaited broad rally. Following news that U.S. President Trump met with Ukrainian President Zelensky, making progress on the peace process, market risk appetite quickly warmed up. Bitcoin surged 3% within hours, breaking through the $90,000 level, while Ethereum also regained above $3,000. However, the underlying drivers of this rebound go far beyond geopolitical headlines. Data analytics firm 10x Research pointed out that beneath the seemingly calm surface, structural changes in the derivatives market are providing a key push for prices: despite low overall trading volume, funding rates continue to rise, indicating that leveraged longs are quietly positioning. This rebound driven by macro narratives and micro-structural shifts suggests the market may be at a critical turning point.

Geopolitical Breakthrough: How a Peace Signal Ignites Market Risk Appetite

In late December 2025, a political news from Washington unexpectedly served as a booster for the crypto market. Ukrainian President Zelensky visited the U.S. and held talks with President Trump on a proposed “peace plan.” Afterward, Trump confirmed that progress had been made in ending the Russia-Ukraine conflict. Although complex issues like territorial control in the east remain unresolved, signals of easing conflict are enough to instantly shift short-term global capital sentiment.

This shift in sentiment is reflected clearly and swiftly in asset prices. The price of traditional safe-haven asset gold retreated after the news, while Bitcoin, as an emerging digital risk asset, surged in tandem, briefly breaking above $90,300. The market logic is straightforward: easing geopolitical tensions reduce tail risks to the global economy, encouraging capital to flow out of safe havens and back into risk assets, including cryptocurrencies. Meanwhile, the Federal Reserve continues liquidity injections through repurchase operations, providing a macro liquidity backdrop for risk asset rallies.

This event further highlights the increasingly close relationship between the crypto market—especially Bitcoin—and global macro narratives and geopolitical developments. It is no longer an isolated “digital alternative asset,” but its volatility increasingly reflects the overall risk pricing in traditional financial markets. From a broader perspective, the mention of $800 billion in potential aid for Ukraine’s reconstruction also sparks imagination about future liquidity surges and some of that capital flowing into digital assets. For traders, understanding this correlation has become an essential part of interpreting short-term market fluctuations.

Underlying Currents Beneath Calm: Derivatives Data Reveals Structural Market Shifts

While geopolitical news provides catalysts, the true foundation of this rally lies in subtle changes within the derivatives market. According to observations published by 10x Research on December 29, the market is showing a contradictory yet delicate state: “The crypto market is entering the new year with cyclical low activity, but derivatives positions are signaling something entirely different.”

The most notable feature is the divergence between sluggish trading activity and rising leverage sentiment. Data shows that the weekly trading volume remains around $80 billion, about 26% below normal levels, indicating low market participation. However, funding rates in perpetual contracts, which measure bullish leverage sentiment, continue to climb. As of last week, Bitcoin perpetual funding rates rose 3.7% to 8.9% (annualized), placing it in the 57th percentile over the past year; Ethereum funding rates also increased to 6.9%. This suggests that, despite weak spot market buying, traders remaining in the market are holding leveraged long positions at higher costs, with strong bullish expectations.

Meanwhile, open interest in futures contracts has stabilized around $27.3 billion after a gradual decline. This “rising prices, stable open interest, increasing funding rates” combination paints a picture of a “thinning but more crowded” market: many retail and short-term traders have exited, leaving more concentrated and resolute long positions. 10x Research warns that this structure makes the market “appear calm on the surface but increasingly fragile inside,” reacting strongly to positive news but also more prone to sharp volatility during liquidity shortages. Changes in options market pricing patterns point to similar conclusions, as shifts often signal trend reversals rather than continuation.

Current Key Indicators and Divergence Signals in the Crypto Market

• Price Performance: Bitcoin breaks $90,000, up about 3% in 24 hours; Ethereum surpasses $3,000, up about 4%.
• Market Breadth: Total market cap rebounds to $3.04 trillion, but overall trading volume remains about 30% below normal.
• Derivatives Sentiment:
  • Bitcoin funding rate: 8.9%/year (up 3.7% over the past week), in the 57th percentile.
  • Ethereum funding rate: 6.9%/year (up 3.4%), in the 34th percentile.
  • Futures open interest: around $273 billion, rebounded from lows but still well below previous highs.
• Market Structure Diagnosis: Extremely low spot trading volume (thin liquidity) combined with rising funding rates (crowded leverage longs) creates a significant divergence, indicating a fragile market structure.
• Model Signal: 10x Research’s model strongly favors Bitcoin outperforming altcoins, with only 0.1 away from triggering a “Bitcoin dominance” upward signal.

Altcoins Follow and Diverge: Logic of Strength and Weakness in the Rebound

Driven by Bitcoin and Ethereum, the mainstream altcoin market also experienced a broad rally. XRP rose about 2%, returning above $1.90; Solana performed even stronger, up over 3%, approaching the $130 level. Other assets like BNB, Dogecoin, Cardano, and various AI-themed tokens also showed upward trends.

However, behind this broad rally lie hidden concerns. 10x Research’s model clearly indicates a strong preference for Bitcoin’s relative performance over altcoins, with only 0.1 remaining to officially signal an “increase in Bitcoin’s dominance.” This judgment is based on multiple factors: in the context of ongoing macro uncertainties and incomplete liquidity recovery, capital tends to flow first into the largest, most liquid, and “digital gold” perceived assets—Bitcoin. Only when Bitcoin’s upward trend is fully confirmed and opens larger upside space will higher-risk capital rotate into altcoins in a significant way.

Therefore, the current altcoin rally is more of a “beta follow” after Bitcoin breaks key resistance levels, rather than the start of a strong independent cycle. This pattern demands higher discernment from investors: distinguishing projects that are merely riding the wave from those gaining momentum through fundamental progress (such as ecosystem growth, technological upgrades). At this stage, the overall market tone may lean more toward “range-bound oscillation” rather than “bullish breakout,” implying increased sector and stock differentiation, and that a broad rally may be unsustainable.

Outlook and Strategies: Navigating the Fragile Balance of the Rebound

In the face of a rebound triggered by geopolitical events and supported by derivatives structure, how should investors strategize? First, it’s crucial to recognize the current market phase. This is not a main rally driven by a flood of new capital, but a sentiment recovery under tight liquidity and fragile market structure. Viewing this rally as a “Santa Claus rally” late show, with cautious expectations for its sustainability and magnitude, is prudent.

For short-term traders, close attention should be paid to subtle changes in derivatives data. Are funding rates overheating? Are open interest and prices rising in tandem (which could indicate new leverage bubbles)? Also, monitor whether Bitcoin’s $90,000 and Ethereum’s $3,000 levels can turn into effective support. If breakouts are confirmed with volume expansion, the next technical targets could be previous highs.

For medium- and long-term investors, a more suitable approach may be structural positioning rather than chasing the rally. Bitcoin’s relative strength signals are worth noting, and it can be considered a core asset in portfolio allocation. For altcoins, prioritize “fundamental-driven” projects—those maintaining strong development activity, user growth, or generating real revenue during the bear market—and use market volatility to build positions gradually.

Ultimately, this rally again demonstrates the complexity of modern crypto markets: they are sensitive to headlines but also driven by on-chain derivatives data. Geopolitical “face” provides stories and momentum, while derivatives “insides” determine the strength and sustainability of the rebound. As 2025 and 2026 unfold, this upward move ignited by “peace talks” may be the beginning of observing how the new year’s market balances high valuations, high expectations, and fragile structures.