"Downside risks are marginally limited, but upside still requires catalysts; a critical window is approaching."
Since mid-October, Bitcoin has continued to decline, with market sentiment clearly turning cautious. As the market once again discusses the "four-year cycle," some traders speculate that 2026 may still be in a phase of pressure. However, recent structural changes suggest that the market is entering a new phase different from a one-sided decline.
Over the past few months, Bitcoin has operated in an environment of converging volatility, deleveraging, and a lack of risk appetite, with prices under sustained pressure. However, from the perspective of derivative positions, ETF fund flows, and key technical indicators, the internal structure of the market has begun to change. As the largest Bitcoin options expiration in history approaches, the distribution of strike prices is becoming an important window to observe market pressure and potential opportunities.
Low Volatility and De-risking in Parallel: Year-End Market Maintains Range-Bound Volatility
In recent months, Bitcoin's implied volatility has continued to converge, with prices likely trading within the range of $70,000 to $100,000. On one hand, there is a short-term lack of catalysts that could drive the market significantly away from this range, and event risks are relatively limited. On the other hand, the Federal Reserve's dovish stance may not meet market expectations as previously anticipated, limiting the overall upward momentum of risk assets.
At the same time, Bitcoin has significantly underperformed other major assets, making it more likely to be used as a tool for "tax-loss selling" by multi-asset investors at year-end to offset realized gains in other markets, thereby creating additional selling pressure on prices. Coupled with the impact of the sharp decline in early October, many trading teams are still digesting earlier losses and have limited willingness to expand risk exposure before the end of the year. Against the backdrop of constrained risk appetite, increasing positions and capital allocation have become more cautious, and the market as a whole maintains a state of low volatility and range-bound trading.
Options Expiration and Risk Budget Reset: Structural Inflection Point Window Approaches
On December 26, 2025, Bitcoin will witness the largest options expiration in history, with approximately $17.2 billion in call options and $6.2 billion in put options set to settle. From the distribution of strike prices, call options are mainly concentrated above $100,000, making it difficult to reach in the short term. In contrast, a significant number of put option open interest is clustered around $85,000, making this area more likely to become a zone of repeated price fluctuations around the expiration date.
Historical experience shows that year-end markets are typically more conservative, while after the new year, with capital reallocation and risk budget recovery, sentiment reversals often exceed expectations. The current technical structure is also changing: downside momentum is marginally slowing, but upward momentum has not yet formed a clear consensus. Against this backdrop, the market may be transitioning from a "downside risk dominance" phase to a gameplay stage of "limited downside but upside still requiring catalysts." After the options expiration is completed, position pressure is expected to be released temporarily, and coupled with potential ETF fund inflows and risk appetite recovery in January, there is room for improvement in market sentiment.
Overall, although 2026 may still pose challenges for long-term one-sided long positions, the research focus has begun to shift toward tactical opportunities with gradually improving risk-reward structures. Bitcoin's underperformance against other major assets for several consecutive weeks, combined with the calendar switch effect from year-end to the new year, may cause related opportunities to emerge earlier than market expectations. The significance of the December 26 options expiration event lies not in the mechanical settlement of the contracts themselves, but in the fact that after this node, market participants often begin to reposition in advance for January's fund inflows and risk appetite recovery. This phase may become an important window for observing structural changes and sentiment inflection points.
Some of the above views are from Matrix on Target. Contact us to obtain the full Matrix on Target report.
Disclaimer: The market is risky, and investment requires caution. This article does not constitute investment advice. Digital asset trading may carry significant risks and instability. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
