Bitcoin Santa Rally Expectations Fade as Fed Decision Looms

• Santa rally expectations have diminished as call options roll down and topside bets cap below all-time highs, according to Jake Ostrovskis of Wintermute.

• Bitcoin has stabilized above $80,000 following a sharp 30% decline, buoyed by higher probabilities of a Federal Reserve 25 basis points rate cut.

• Market indicators like the 25 Delta Risk Reversal show negative sentiment at -4.8 for November and -4.9 for December, signaling ongoing hedging activity.

Bitcoin Santa rally prospects fade amid cautious options trading and Fed rate cut odds. Explore if BTC can rebound to $100k or face further volatility—stay informed on key market catalysts today.

What is the current outlook for the Bitcoin Santa rally?

Bitcoin Santa rally expectations have significantly cooled, with traders scaling back aggressive year-end bullish bets following a 30% price plunge. According to Jake Ostrovskis, Head of OTC Trading at Wintermute, the market has priced out the once-consensus view of a strong December surge, as call options are rolling downward and targets remain below all-time highs. This shift comes as Bitcoin stabilizes above $80,000 amid elevated chances of another Federal Reserve rate cut, though short-term caution persists.

How are options traders positioning for Bitcoin in November and December?

Detailed analysis of options positioning reveals a tempered bullish stance. For November, top put volumes cluster at $80,000, $82,000, and $88,000, indicating traders are hedging to protect against downside risks while defending key support levels. In December, the most bullish bets from the past 24 hours aim for a rally to around $112,000, but overall activity underscores a mild outlook rather than explosive growth. Jake Ostrovskis noted that previous high-conviction calls from institutions like Paradigm have been reduced, with expectations now limited to $100,000-$118,000, far from the recent peak of $126,000. This positioning reflects broader market dynamics where big funds prioritize risk management over aggressive upside plays.

Source: X

The 25 Delta Risk Reversal metric further illustrates this caution, registering at -4.8 for end-November and -4.9 for December, which points to a premium on put options and heightened hedging into year-end. Ostrovskis emphasized that a true bottom for Bitcoin might only form if this indicator neutralizes to zero, signaling reduced fear. Supporting data from Amberdata highlights this negative skew, where protective strategies dominate despite improving macroeconomic signals like potential Fed easing.

Source: Amberdata

BTC Sentiment and Momentum

Bitcoin’s sentiment remains guarded, with momentum indicators still in negative territory despite a brief recovery to $89,000 earlier this week. Analytics from Swissblock indicate that price momentum lingers at levels associated with late-stage capitulation, suggesting every recent uptick is merely a tactical rebound rather than a sustained reversal. Defending the $85,000 level could spark renewed optimism, potentially igniting higher climbs if stabilization holds above $85,000-$86,500.

“It remains deeply negative, at levels typical of late-stage capitulation. Until momentum turns, every bounce is just a tactical reaction. An ignition becomes possible if BTC stabilizes above $85K–$86.5K,” Swissblock stated in their latest report.

Source: Swissblock

On the demand side, spot Bitcoin ETF inflows have shown inconsistency this week, contributing to sideways trading and limited upward traction. Data from Arkham reveals that while December’s bullish options target $112,000, the uneven ETF flows underscore choppy near-term action for Bitcoin, likely persisting above $80,000 until major catalysts emerge.

Source: Arkham

The Federal Reserve’s rate decision in early December looms as the pivotal event, potentially dictating whether Bitcoin experiences renewed vigor or continued pressure. Nic Puckrin, analyst at The Coin Bureau, echoed this in a statement, saying, “The Fed holds the key to the market’s end-of-year finale – and its next rate decision will determine whether we get a Santa rally or a Santa dump.” As of now, markets are not fully pricing in downside risks, but the outcome could reshape the Bitcoin Santa rally narrative.

Frequently Asked Questions

Is the Bitcoin Santa rally canceled for 2025?

The Bitcoin Santa rally is not entirely canceled but has been largely priced out of expectations, per Wintermute’s Jake Ostrovskis. With calls rolling down and bets capped below all-time highs, traders anticipate mild gains to $100,000-$118,000 instead of a surge, though the Fed’s December decision remains a wildcard catalyst.

What factors could trigger a Bitcoin price rebound before year-end?

A Bitcoin rebound could be sparked by the Federal Reserve’s rate cut confirmation, stabilizing momentum above $85,000, and positive ETF inflows. Neutralizing the 25 Delta Risk Reversal to zero would signal reduced caution, while defending $80,000 support maintains the foundation for potential upside to $112,000 as targeted in recent options activity.

Key Takeaways

• Santa Rally Diminished: Market positioning has eliminated strong year-end rally hopes, with bullish calls trimmed and targets below all-time highs, as noted by Wintermute.
• Cautious Hedging: Negative 25 Delta Risk Reversal values indicate ongoing put premiums and protection strategies through December, reflecting short-term wariness despite rate cut odds.
• Fed as Catalyst: The upcoming Federal Reserve decision could pivot Bitcoin’s trajectory—watch for stabilization above $85,000 to confirm any bullish shift.

Conclusion

In summary, the Bitcoin Santa rally faces headwinds from subdued options activity and persistent negative momentum, even as prices hold above $80,000 post a 30% correction. Insights from experts at Wintermute and The Coin Bureau, alongside data from Amberdata and Swissblock, highlight the Federal Reserve’s role in determining year-end outcomes. Investors should monitor rate decisions closely for signals of stabilization or reversal, positioning accordingly for potential opportunities in the evolving crypto landscape.