Bitcoin's recent surge above $100,000 may have triggered a dangerous reversal. The flagship cryptocurrency briefly touched $90,000 on Wednesday. It then slipped below $87,000, underperforming traditional equity markets.BTC bearish sentiment now grips derivatives markets. Traders are positioning heavily for downside protection. The focus centers on the December 26 options expiry
Data shows massive put option accumulation at the $85,000 strike level. This suggests expectations of near-term price weakness. Thirty-day implied volatility has climbed toward 45%. Skew remains firmly negative, reflecting strong demand for downside hedges.
Bloomberg Intelligence commodities strategist Mike McGlone delivered a stark warning. Bitcoin's rally to six figures may have planted seeds for collapse. He projects a potential drop to $10,000 by 2026.
Leverage Trap: Why Bulls Are Running Scared
"Bitcoin's surge toward six figures may have sparked a cycle back toward $10,000, potentially in 2026," McGlone stated. He argues extreme wealth creation periods often trigger sharp reversions. The next economic downturn could be led by digital asset collapse.
Alex Kuptsikevich, chief market analyst at FxPro, noted clear defensive positioning. "The uptrend that formed in late November has been broken," he said. The market now trades like October's sell-off period. Sharp rebounds fail to gain meaningful traction.
CryptoQuant data reveals short-term holders have suffered losses for over a month. Glassnode estimates show long-term holders shed roughly 500,000 BTC since July. This selling pressure compounds BTC bearish sentiment across the market.
December Deadline: Options Data Reveals Panic
Ethereum shows slightly more balanced positioning than Bitcoin. Short-dated ETH skew remains negative but longer-dated skew approaches neutral. Still, traders accumulated significant puts around the $2,500 level. This highlights a key area of concern.
Kuptsikevich explained the Federal Reserve's rate cuts mattered more as signals. They indicated tightening was over, allowing risk exposure through drawdowns. "That patience helped push bitcoin to new highs earlier in the year," he noted.
However, leverage remains dangerously elevated across crypto markets. October's liquidation wave exposed fragile price discovery mechanisms. Crowded positioning can trigger cascading sell-offs when volatility spikes.
Longer-dated skew anchored near -5% indicates bearish sentiment extends into 2026. Geopolitical risks and leverage conditions will drive price action. Markets appear braced for significant volatility as year-end approaches.
Bitcoin has dropped only about 5% through mid-December 2025. But the combination of defensive options positioning and analyst warnings signals trouble. BTC bearish sentiment could intensify if key support levels break.
