Bitcoin's 9% decline in December: Institutions are accumulating, retail investors are retreating

December has been a tumultuous month for Bitcoin. The price dropped nearly 9%, with volatility reaching its highest level since April last year, and the entire market appears tense. But this outward turbulence actually conceals an interesting divergence: institutions are buying, retail investors are selling.

According to the latest on-chain data analysis, despite short-term volatility, market structure is quietly changing. On one hand, enterprise-level asset management firms increased their holdings by 42,000 BTC in December, marking the highest single-month increase since July this year, with total holdings surpassing the 1 million BTC mark. On the other hand, investors holding listed trading products are reducing their positions, signaling a shift from retail speculation to institutional accumulation.

The “Breakup” Market Between Institutions and Retail Investors

This divergence best explains the situation. Professional investors and long-term holders are steadily increasing their positions at lows, while product traders and short-term participants are choosing to exit. The latter are voting with their feet, possibly scared by volatility or losing patience due to the 9% drop.

On-chain wallet data further confirms this. BTC held for 1-5 years experienced noticeable fluctuations in December, likely due to partial profit-taking or strategic adjustments; meanwhile, long-term holders with over 5 years of holdings almost took no action, as if in deep sleep, ignoring market noise.

Interestingly, some institutions are trying new financing methods—issuing preferred shares instead of common stock to raise funds for Bitcoin purchases. This reflects a long-term asset allocation approach rather than short-term speculation.

Miners “Winter”

Mining operations are having a tough time. The network hash rate declined by 4% in December, the largest single-month drop since April last year. Regions like Xinjiang, under policy pressure, began reducing production. While electricity costs for mainstream miners are decreasing, profit margins are also being squeezed.

But there’s an counterintuitive aspect: historical data shows that a continued decline in hash rate often serves as a contrarian indicator. Past instances of similar situations have typically been followed by a Bitcoin rally within 90-180 days.

Multi-Dimensional Health Check

This analysis goes beyond price movements. VanEck uses its GEO framework to assess Bitcoin’s structural health from three dimensions: global liquidity, ecosystem leverage, and on-chain activity. From this perspective, liquidity is improving, and enterprise holdings are increasing, enough to offset weak signals like stagnant active addresses and declining transaction fees.

Bitcoin is currently taking a deep breath. Short-term speculation is retreating, long-term holders remain steadfast, and institutions are continuously accumulating. Coupled with miners reducing production, volatility converging, and the US dollar index weakening, the market is entering a phase of structural rebalancing.

Currently, BTC is around $90.83K, with a 24-hour increase of +0.11%.

Will Q1 2026 Bring a Turning Point?

VanEck concludes that the market is entering a phase of adjustment and consolidation. This process may seem dull, but it is actually building strength for the next wave of strong gains. Historically, such correction periods are often the best windows for accumulation. As we move into the first quarter of 2026, Bitcoin may gradually emerge from its consolidation.

Short-term volatility and pain are superficial; the deeper market structure is evolving toward greater health and institutionalization.