Bitcoin’s holiday rally: Are BTC bulls setting up a classic bear trap?

No doubt, Q4 has shaped up to be the weakest quarter of 2025.

The pullback has wiped out nearly 63% of the gains from the Q2–Q3 run, pushing many HODLers underwater.

Still, there’s a week left before the year wraps up, and the market is heading into a holiday-thin liquidity period. Timing-wise, that matters. 

Bitcoin [BTC] is still trading 25% below its $126k high, but despite the ongoing FUD, its market dominance hasn’t really budged, hovering close to 60%. That points to capital staying parked rather than rotating out.

Source: TradingView (BTC.D/USDT)

In other words, that dominance points to underlying confidence.

Under normal conditions, you’d expect some rotation into altcoins. Instead, altcoin dominance (excluding–top 10) has compressed to just 6.73%, a five-year low, reinforcing that risk appetite remains concentrated in Bitcoin.

That sets up the real question: What happens if macro FUD cools and the market flips back risk-on? With the “holiday season” around the corner, do bulls step in, squeeze late shorts, triggering the textbook bear-trap setup?

Is a short squeeze setting up Bitcoin’s holiday bounce?

The holiday season couldn’t have come at a better time.

Technically, it’s been over a month since Bitcoin reclaimed $90k, and naturally, a thick short-liquidity cluster has built up just above that level, as shorts have been playing the volatility.

Zooming in, there’s over $5.8 billion in leveraged shorts around $95k, making it a clear target for bulls. Will they step in? Notably, Bitcoin’s MVRV is flashing “undervaluation,” adding extra incentive for a potential move.

Source: Coinglass

In short, the stage looks set for a textbook bear trap.

Supporting this, Bitcoin’s technicals are reinforcing the undervaluation. RSI is hanging around 35, and BTC has chopped under $90k for six straight weeks, potentially setting up that classic resistance-to-support flip.

From here, a breakout above this zone could hit stacked short-liquidity clusters, adding upward pressure and potentially kicking off Bitcoin’s “holiday rally,” with $95k as the near-term resistance target.

Final Thoughts

• Bitcoin dominance remains strong despite the Q4 pullback, signaling capital is staying put, while altcoin dominance hits a five-year low.
• Technicals hint at a potential bear-trap setup, with $5.8 billion in short liquidity poised to fuel Bitcoin’s holiday rally.