Traders are increasingly preparing for downside risks in crypto markets, with a surge in put options signaling that bitcoin could fall below $85,000.
Bitcoin hovered near $87,000, with recent rallies losing steam and short-lived gains quickly giving way to renewed selling, according to CoinDesk. The cryptocurrency briefly climbed to $90,000 late Wednesday before slipping back under $87,000, underperforming equities amid ongoing macro uncertainty. Attention is focused on the Dec. 26 options expiry, where derivatives data show a heavy cluster of puts at the $85,000 strike. Thirty-day implied volatility has climbed toward 45%, while both short- and long-dated skew remain negative, reflecting strong demand for downside protection, according to Derive.xyz.
“There’s clear defensive positioning going into year-end,” said Alex Kuptsikevich, chief market analyst at FxPro. “The uptrend from late November has been broken, and the market is behaving like it did during the October sell-off, with sharp rebounds failing to hold.”
Ether shows a slightly more balanced profile. While short-dated ETH skew remains negative, longer-dated skew is closer to neutral, suggesting less conviction around a sustained downturn. Traders have accumulated a notable cluster of puts around $2,500 for the Dec. 26 expiry, marking a key area of concern.
Some analysts warn that bitcoin’s long-term cycle may be turning. Bloomberg Intelligence commodities strategist Mike McGlone noted that the rally above $100,000 earlier this year could set the stage for a deeper retracement.
“Bitcoin’s surge toward six figures may have triggered a cycle back toward $10,000, potentially in 2026,” McGlone said. He added that highly speculative digital assets with effectively unlimited supply could be most vulnerable in the next economic downturn.
Despite these warnings, bitcoin has been relatively resilient, down about 5% in 2025 through mid-December. CryptoQuant data show short-term holders have been sitting on losses for over a month, while Glassnode estimates that long-term holders have sold roughly 500,000 BTC since July.
Kuptsikevich noted that Federal Reserve rate cuts this year acted more as a signal that tightening was over than as a direct catalyst, allowing investors to maintain risk exposure during drawdowns.
“That patience helped push bitcoin to new highs earlier in the year,” he said. “But leverage remains elevated, and the October liquidation wave highlighted how fragile price discovery can be when positioning is crowded.”
Looking ahead, geopolitical risks and leverage conditions are expected to shape market dynamics in 2026. For now, crypto markets remain braced for volatility, with downside risks firmly in focus as the year draws to a close.
