Since mid-October, Bitcoin has continued to decline, and market sentiment has clearly shifted to a cautious stance. As the market discusses the "four-year cycle" again, some traders speculate that 2026 may still be under pressure. However, recent structural changes indicate that the market is entering a new phase that differs from a one-sided downward trend.
In the past few months, Bitcoin has operated in an environment characterized by converging volatility, deleveraging, and a lack of risk appetite, with prices remaining under pressure. However, changes in the internal structure of the market can be observed from derivatives positions, ETF fund flows, and key technical indicators. As the largest Bitcoin options expiration in history approaches, the distribution of strike prices is becoming an important window for observing market pressure and potential opportunities.
Low Volatility and Risk Reduction: Year-End Market Maintains Range-Bound Fluctuations
In recent months, Bitcoin's implied volatility has continued to converge, with prices likely operating within the range of $70,000 to $100,000. On one hand, there is a lack of upward catalysts that could significantly push the market out of this range in the short term, and event risks are relatively limited; on the other hand, the Federal Reserve's dovish stance may not meet previous market expectations, limiting the overall upward momentum of risk assets.
At the same time, Bitcoin has significantly underperformed other major assets, making it easier for multi-asset investors to use it as a "tax loss sell" tool to offset realized gains in other markets, thereby creating additional selling pressure on prices. Coupled with the severe downturn in early October, many trading teams are still digesting previous losses, and their willingness to expand risk exposure before year-end is limited. Against a backdrop of constrained risk appetite, increasing positions and capital allocation have become more cautious, keeping the market in a state of low volatility and range-bound fluctuations.
Options Expiration and Risk Budget Reset: Structural Turning Point Window Approaches
On December 26, 2025, Bitcoin will face 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 amount of put options open interest is clustered around $85,000, making this area more likely to become a battleground for price fluctuations before and after expiration.
Historical experience shows that the market tends to be more conservative at year-end, while after entering the new year, the speed of sentiment reversal often exceeds expectations as capital is reallocated and risk budgets are restored. The current technical structure is also changing: downward momentum is marginally slowing, but there is no clear consensus on upward movement. In this context, the market may be transitioning from a phase where "downside risk dominates" to one where "downside is limited, and upside still requires catalysts." After the options expiration is completed, position pressure is expected to be released in stages, combined with potential ETF fund inflows and risk appetite recovery in January, creating room for improvement in market sentiment.
Overall, although 2026 may still pose challenges for long-term unilateral bullish positions, the focus of research has begun to shift towards tactical opportunities where the risk-return structure is gradually improving. Bitcoin has underperformed other major assets for several weeks, and the calendar switch effect from year-end to the beginning of the year may lead to related opportunities arising earlier than the market expects. The significance of the options expiration event on December 26 lies not in the mechanical settlement of the contracts themselves, but in the fact that after this point, market participants often begin to reposition in anticipation of January's capital inflows and risk appetite recovery. This phase may become an important window for observing structural changes and sentiment turning points.
Some of the above views are from Matrix on Target, Contact Us_ to obtain the complete report from Matrix on Target._
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