Traders are bracing for downside risks in the crypto market, with a surge in put options signaling expectations that bitcoin could slip below $85,000.
Bitcoin hovered near $87,000 as analysts and options positioning pointed to mounting risks of a deeper pullback into early 2026. Recent rebounds have lost momentum, with short-lived rallies quickly giving way to renewed selling, according to CoinDesk.
The cryptocurrency briefly climbed to $90,000 late Wednesday before falling back under $87,000, underperforming equity markets amid ongoing macro uncertainty. Attention is turning to the Dec. 26 options expiry, where derivatives data show heavy accumulation of puts at the $85,000 strike. Thirty-day implied volatility has climbed toward 45%, while both short- and long-dated skew remain negative, reflecting strong demand for downside protection, according to Derive.xyz.
“There’s clear defensive positioning going into year-end,” said Alex Kuptsikevich, chief market analyst at FxPro. “The late-November uptrend has broken, and the market is now behaving like it did during the October sell-off, with sharp rebounds failing to hold.”
Ether has shown a slightly more balanced profile. While short-dated ETH skew remains negative, longer-dated skew is closer to neutral, signaling less conviction around a sustained downturn. Traders have accumulated a notable cluster of puts at the $2,500 level for the Dec. 26 expiry, highlighting a key area of concern.
Some analysts warn that bitcoin’s long-term cycle may be turning. Bloomberg Intelligence commodities strategist Mike McGlone said the rally above $100,000 earlier this year could be setting the stage for a deeper retracement.
“Bitcoin’s surge toward six figures may have sparked a cycle back toward $10,000, potentially in 2026,” McGlone said, noting that periods of extreme wealth creation are often followed by sharp reversals. He also warned that highly speculative digital assets with effectively unlimited supply could be hit hardest in the next economic downturn.
Despite these warnings, bitcoin has been relatively resilient, down only about 5% in 2025 through mid-December. Data from CryptoQuant indicates short-term holders have been sitting on losses for over a month, while Glassnode estimates that long-term holders have sold roughly 500,000 BTC since July.
Kuptsikevich added that Federal Reserve rate cuts this year were less a direct catalyst and more a signal that monetary tightening had ended, allowing investors to hold risk exposure through drawdowns.
“That patience helped push bitcoin to new highs earlier in the year,” he said. “But leverage remains elevated, and the October liquidation wave showed how fragile price discovery can be when positioning gets crowded.”
Looking ahead, geopolitical risks and leverage conditions will likely drive market dynamics in 2026. For now, crypto markets remain braced for volatility, with downside risks firmly in focus as the year ends.
