Bitcoin’s price action diverged sharply from precious metals on Tuesday, dropping below the $88,000 threshold. While gold and silver scaled new record peaks, the leading cryptocurrency decoupled from this rally. Analysts point to a confluence of pressures: persistent outflows from U.S. spot Bitcoin ETFs, a looming multi-billion dollar options expiry, and thinner trading liquidity due to the holiday season.
A Significant Options Expiry Looms
Market participants are bracing for a major liquidity event this Friday, December 26th. On the Deribit exchange, Bitcoin options contracts with a notional value estimated between $23.6 billion and $28.5 billion are set to expire. This represents over half of the total open interest in the market.
The “max pain” price—where the most options would expire worthless—is situated near $95,000. A heavy concentration of call options is clustered between $100,000 and $120,000, while put options are creating gravitational pull around the $85,000 mark. This massive expiry, combined with reduced holiday trading volumes, is expected to fuel volatility. Recent data shows open interest in Bitcoin futures has already declined by $3 billion, signaling a broad reduction in risk exposure.
Sustained ETF Outflows Weigh on Sentiment
The pressure on Bitcoin is underscored by continued capital withdrawal from exchange-traded funds. On Monday, U.S. spot Bitcoin ETFs recorded net outflows of $142 million, marking the third consecutive day of withdrawals.
While BlackRock’s iShares Bitcoin Trust (IBIT) saw a modest $6 million inflow, this was more than offset by substantial selling in funds offered by Fidelity, Bitwise, and Ark Invest. This trend extends a challenging period for the sector; global crypto exchange-traded products (ETPs) bled nearly $3.76 billion in November alone, a stark reversal following months of steady accumulation.
Should investors sell immediately? Or is it worth buying Bitcoin?
MicroStrategy’s Parent Company Shifts Tactics
Mixed signals are also emerging from a major corporate holder. Strategy Inc., the parent of former MicroStrategy, has temporarily paused its aggressive Bitcoin acquisition strategy. The firm recently sold $748 million worth of its own shares, a move aimed at bolstering its cash reserves to $2.19 billion.
The company’s substantial Bitcoin treasury remains untouched, holding 671,268 BTC acquired at an average price of $74,972 per coin. Despite this, the market reaction was negative, with shares of MSTR declining 4.4% on Monday.
Technical and Network Indicators Show Strain
From a chart perspective, Bitcoin is trading approximately 30% below its yearly high of $126,268. Market technicians note the formation of a bearish pennant pattern on shorter timeframes, and the Supertrend indicator has turned negative. The cryptocurrency has now traded below its long-term bull market channel for six consecutive weeks.
Adding to the concerns, the network’s hash rate has declined by 4%, according to analysis by VanEck. Historically, such drops—often viewed as indicators of miner capitulation—have coincided with local market bottoms. In the near term, however, they raise questions about network security and stability.
With the significant options expiry on December 26th, a clear path back above the psychologically important $90,000 level appears blocked for now.
Ad
Bitcoin Stock: Buy or Sell?! New Bitcoin Analysis from January 8 delivers the answer:
The latest Bitcoin figures speak for themselves: Urgent action needed for Bitcoin investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from January 8.
Bitcoin: Buy or sell? Read more here...