Bitcoin Stumbles, and Traders Are Betting the Slide Isn’t Over
Bitcoin’s odds of ending the year below $90,000 have surged to roughly 50%, according to options market pricing, as traders stack up protection against further downside. At the same time, markets are assigning only a 30% chance that the cryptocurrency will finish 2025 above $100,000.
Bitcoin fell 4.2% on Thursday to $86,681 after touching a seven-month low. The token, which set a record at $126,223 in early October, is now down more than 7% this year and is heading for its first annual decline since 2022. It has also slipped below both its 50-day and 200-day moving averages, weakening support from trend-following investors.
Analysts say the momentum that powered bitcoin higher earlier in the year has faded. Hopes for rapid interest rate cuts have cooled as Federal Reserve officials warn about stubborn inflation and urge caution on policy easing. That shift has weighed on risk assets from tech stocks to crypto.
Liquidations across leveraged long and short positions have topped an estimated $8 billion over the past month, highlighting the market’s fragility. Options positioning shows traders clustering around puts struck near $85,000 for late-December expiry, a sign of rising demand for insurance against further weakness.
Sentiment in options markets has turned decidedly bearish. The 30-day put skew has dropped from minus 2.9% to minus 5.3%, indicating traders are paying an increasing premium for downside protection. Implied volatility has also jumped, with 30-day volatility rising from 41% to 49% in two weeks and 180-day volatility climbing from 46% to 49%.
Not everyone thinks the selloff will persist. Sean Farrell, head of digital asset strategy at Fundstrat, argues that oversold signals are beginning to flash after bitcoin slid below $90,000. He says the latest drop flushed out last week’s forced sellers and believes the current zone could attract opportunistic buyers, even if the rebound proves short-lived.
Others remain sceptical. Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions, questions bitcoin’s real-world utility despite growing institutional interest. He says investors can justify a 1% or 2% allocation to capture extreme upside scenarios, but he notes that a collapse to zero would barely dent a portfolio with such limited exposure.
For now, the macro backdrop, options positioning and volatility metrics all point in the same direction. Bitcoin is on unstable footing, and traders are bracing for more turbulence as the year winds down.
