No 'Santa Rally' for Bitcoin…Short-term rebound expectations also limited

Bitcoin has barely stabilized in the $80,000 range after a 30% plunge, but analysts say a strong rally through year-end is difficult to expect. They assess that market-wide position reductions and conservative bets in the options market are capping the upside.

On the 27th (local time), AMB Crypto reported that Jake Ostrovskis, head of Wintermute OTC, said the year-end 'Santa rally' scenario has effectively been eliminated in the options market. He analyzed that major institutional investors are lowering call option price targets and capping the upside well below the previous all-time high.

In the options market, modest forecasts that see Bitcoin's year-end price in the $100,000–$118,000 range dominate, while aggressive positions expecting a re-break of the $126,000 peak have sharply declined. The 25-delta risk reversal (25RR), a risk-appetite indicator, remained negative for both November and December, showing that demand for sell hedges is still high.

Despite this atmosphere, the market sees a high probability that the $80,000 support will hold. In fact, the most put option trading this month concentrated around $80,000, $82,000, and $88,000. However, SwissBlock pointed out that Bitcoin's momentum remains in the 'extremely bearish' range and that it needs to reclaim the $85,000 level to gain rebound momentum.

ETF fund flows are also having an effect. Recently, ETF inflows have been irregular, limiting upward momentum, and analysts say conditions make it difficult for Bitcoin to break out of a trading range in the short term. Institutional investors pointed to the U.S. Federal Reserve's (Fed) interest-rate decision scheduled for December as a key directional variable.

Coin Bureau analyst Nick Purklin judged that the year-end market ultimately depends on the Fed's choice. He said, "This decision is the key variable that will determine whether it creates a Santa rally or leads to a Santa dump."