A significant metric in the Bitcoin spot market has surged to its second-highest level this year, indicating a possible bottom for the cryptocurrency. Despite this signal, options traders are taking a cautious approach, heavily investing in puts within the $85,000 to $80,000 range to hedge against potential further downsides. Analysts suggest that Bitcoin might experience a potential bull trap if it dips below the $80,000 mark, but they also predict a recovery by the year’s end.
Currently, Bitcoin is in its fourth consecutive weekly decline, marking its longest downtrend since June 2024. This slump has left the asset facing its bleakest fourth-quarter performance since 2018, with a current loss of 24.43%. Sean Dawson, head of research at the options analytics platform Derive, expressed concerns about the market dynamics, saying, “I expect a rough ride into Christmas.”
Amidst these challenges, some on-chain metrics indicate a glimmer of hope, with the aggregate spot bid-ask delta at 10% depth reaching its second-highest level of 2025. This spike hints at increased dip-buying activity, which may help absorb some of the selling pressure. Historically, similar spikes in the past, notably in March and April, have preceded significant price recoveries, including a remarkable 64% bull run.
Currently trading at $87,400, Bitcoin has rebounded approximately 6% since hitting a low of $82,100 on November 21, and is up 1.8% over the past 24 hours, as per CoinGecko data. This recovery coincides with a notable shift in Federal Reserve policy expectations, as the likelihood of a December rate cut has risen from 40% last week to nearly 70% now. However, Dawson remains cautious about the current rebound, suggesting the potential for a “bull trap.”
Highlighting persistent market concerns, Dawson noted that many digital asset treasuries are trading below their net asset value, which complicates their ability to accumulate. Similar trends are evident with Bitcoin and Ethereum exchange-traded funds, both struggling in the red. Despite the heightened chances of a rate cut, Dawson pointed out that “fears of sticky inflation” might lead to a gradual transition into quantitative easing, posing additional worries for traders.
Looking ahead, Dawson is optimistic for a potential recovery to $100,000 by the first quarter of 2026 but maintains a bearish outlook for the remainder of 2025. He notes a negative skew in the options market, with traders protecting their investments by acquiring puts, especially for options set to expire in December 2025.
He speculated that Bitcoin could temporarily dip into the mid to high $70,000 range before rebounding to about $90,000 by year’s end, provided the Fed avoids adopting a hawkish stance. As market sentiment continues to linger in “extreme fear” territory, there appears to be a slight improvement following a weekend bounce. The upcoming decisions from the Federal Reserve, which include the conclusion of quantitative tightening on December 1 and an interest rate decision on December 10, are anticipated to significantly influence Bitcoin and broader financial markets in the weeks to come.
