Recent analysis indicates that the anticipated “Santa rally” for Bitcoin in 2025 appears increasingly unlikely. As of now, the market does not reflect expectations for such an event, with key focus shifting toward the Federal Reserve”s impending rate decision.
Following a steep 30% drop, Bitcoin has stabilized above the $80,000 mark, amid expectations of a potential 25 basis points rate cut by the Fed. Despite this relative calm, the outlook for year-end performance has dimmed, according to Jake Ostrovskis, who is the Head of OTC trading at market maker Wintermute.
Ostrovskis pointed to the current positioning in the options market, noting a significant adjustment in bullish bets from major players like Paradigm. He stated that the previously widespread belief in a year-end rally has been largely priced out, as options traders are now projecting only a modest increase to between $100,000 and $118,000, rather than a surge to the recent peak of $126,000.
The sentiment surrounding Bitcoin remains cautious. The 25 Delta Risk Reversal (25RR), a measure of market sentiment, is currently negative for both late November and December, indicating a preference for hedging through put options. This sentiment reflects a short-term wariness, despite the improving likelihood of a Fed rate cut.
For Ostrovskis, a genuine bottom for Bitcoin could be established if the 25RR returns to neutral. Presently, the highest volumes for put options are concentrated at $80,000, $82,000, and $88,000, reinforcing the belief that the market is likely to defend the $80,000 support level.
Looking ahead to December, while some bullish bets have emerged targeting a potential rise to $112,000, analysis from Swissblock suggests that despite a recovery to $89,000 earlier in the week, the momentum has yet to shift positively. The firm indicates that maintaining support at $85,000 could foster hopes of a more significant upward movement.
In terms of demand, inflows from exchange-traded funds (ETFs) have been inconsistent, contributing to a lack of momentum and suggesting that Bitcoin may continue to trade sideways in the near term. The upcoming decision from the Fed will likely play a crucial role in determining whether the current trend stabilizes or shifts altogether.
Nic Puckrin, an analyst at The Coin Bureau, echoed this sentiment in a recent communication, emphasizing the impact of external economic factors on Bitcoin“s performance.
