Crypto markets are facing increasing pressure as Bitcoin hovers near the $87,000 mark, with recent trading activity and analyst insights indicating a heightened risk of a more significant downturn as early as 2026. Following a brief ascent to $90,000 late Wednesday, Bitcoin has fallen back below the critical threshold, showing underperformance compared to equity markets amid ongoing macro uncertainties.
Traders are becoming increasingly cautious, particularly with the Dec. 26 options expiry approaching. Data from derivatives markets reveals a notable accumulation of put options at the $85,000 strike price, indicating a possibility that Bitcoin may dip below that level soon. The thirty-day implied volatility has risen to approximately 45%, reflecting increased demand for downside protection, while the skew remains predominantly negative. This suggests that bearish sentiment is projected to extend into the first half of the following year.
Alex Kuptsikevich, chief market analyst at FxPro, pointed out a clear defensive positioning as we approach year-end. He commented on the disruption of the uptrend that emerged in late November, noting that the market’s behavior is increasingly reminiscent of the volatility seen during the October sell-off, characterized by brief recoveries followed by renewed selling pressure.
In contrast, Ethereum presents a somewhat more balanced profile, even though short-dated ETH skew remains negative. Longer-dated skew trends closer to neutral, indicating less conviction regarding a sustained downturn. Nonetheless, traders have positioned themselves with a noticeable cluster of put options around the $2,500 level for the Dec. 26 expiry, underscoring a key area of concern for Ethereum.
Some analysts are cautioning that Bitcoin’s long-term cycle may be shifting. Mike McGlone, a commodities strategist at Bloomberg Intelligence, suggested that Bitcoin’s rally past the $100,000 mark earlier this year could have set the stage for a substantial retracement, potentially down to $10,000 by 2026. He argued that periods marked by extreme wealth creation often lead to sharp corrections in the market. According to McGlone, the next economic downturn could be exacerbated by a collapse in speculative digital assets, many of which have virtually unlimited supply.
Despite these warnings, McGlone noted Bitcoin’s relative resilience; it has only declined by about 5% in 2025 through mid-December. However, data from CryptoQuant indicates that short-term holders have been experiencing losses for over a month, while estimates from Glassnode suggest that long-term holders have sold off around 500,000 BTC since July.
Kuptsikevich emphasized that while the Federal Reserve’s rate cuts earlier this year were not direct catalysts for market movements, they signaled the end of tightening and allowed investors to manage risk exposure even amid drawdowns. This patience, he noted, earlier contributed to Bitcoin’s record highs. However, the high leverage in the market poses risks, highlighted by the volatility witnessed during the October liquidation wave, which illustrated how fragile price discovery can be under crowded positioning.
As the year draws to a close, geopolitical risks and the prevalence of leverage will likely serve as pivotal drivers influencing market dynamics heading into 2026. Currently, the crypto markets are bracing for ongoing volatility, with downside risks becoming increasingly prominent.
