Bitcoin options market expects strength in 'Q1 2026' rather than a 'Santa rally'

In the Bitcoin (BTC) options market, expectations for a year-end Santa rally have weakened, and major bullish bets have shifted to the first quarter of 2026. Despite the recent Federal Reserve (Fed) interest rate cuts, indicators to gauge a short-term bullish turn have been limited.

According to a report by Decrypt on the 11th (local time), the position with the most open interest in the current options market is the December 26 expiry $100,000 call option, with a total of 18,360 contracts open. Put options in the same interval are around 2,540 contracts. However, many are structured as upside-limited strategies such as long call condors and bull call spreads, indicating they are not bets based on a short-term sharp rally scenario.

Year-end-specific low liquidity is also affecting market flows. Adam Chu, senior researcher at GreeksLive, explained, "The year-end closing period is the most illiquid period," saying market activity is limited and short-term momentum formation is difficult. A decline in implied volatility was also cited as a factor lowering short-term volatility expectations.

However, major bullish bets are concentrated on March 2026 expiries. In particular, most open interest is concentrated in $130,000 and $180,000 call options, suggesting the market is reflecting a mid-term upside possibility. Sean Dawson, head of research at Derive, said, "The probability that Bitcoin will settle above $100,000 within this year is about 24%."

The Fed announced a plan to purchase about $4 billion per month in short-term Treasury bills alongside interest rate cuts. Although described as a technical measure for liquidity management, it did not lead to a clear shift to broad risk-asset buying. The 25-delta option skew has improved from -8% to -5% over the past two weeks but remains in negative territory, maintaining demand for downside protection.

Bitcoin is currently trading around $89,500 and has retraced from $94,267 recorded immediately after the rate decision. CryptoQuant indicated a possible short-term rebound zone at about $99,000.