The Federal Reserve’s recent rate cut briefly ignited optimism in the cryptocurrency market, but data from the options market reveals that traders remain cautious. While Bitcoin’s price hovers around the $90,000 range, many investors anticipate only a limited recovery rather than a robust rally.
Restrained Optimism in the Options Market
According to data from options analysis platform Laevitas, the most traded contract is a $100,000 call option expiring on December 26. With 18,360 bullish contracts compared to just 2,540 put options, there appears to be strong bullish sentiment. However, the trading structures paint a different picture: investors prefer strategies like “long call condor” and “bull call spread,” which offer limited gain potential, indicating weak expectations for a dramatic “Christmas rally.”
The Fed’s announcement of monthly purchases of approximately $40 billion in short-term Treasury securities for liquidity management has technically relieved the market. Yet, it hasn’t significantly boosted Bitcoin’s price. The 25-delta options skew has improved from -8% to -5% over the past two weeks, signaling some improvement but remaining negative, suggesting a persistent search for downside protection.
Liquidity Weakens: Year-End Pressure Increases
Following the Fed’s decision, Bitcoin retreated by around 5.5% from an intraday peak of $94,267 to approximately $89,500. Market experts attribute this weakness to historically low liquidity as the year-end approaches. Adam Chu, Chief Researcher at GreeksLive, explains that the holiday season often sees the thinnest liquidity, reduced trading volumes, and weakened price momentum in the crypto market.
Chu also points out that falling volatility expectations do not support a strong rally. The softening of implied volatility indicates that significant price movements are not expected in the short term, leading investors to avoid aggressive bullish positions.
Nonetheless, there is prevalent optimism for the medium term. Sean Dawson, Research Director at on-chain options platform Derive, notes that the probability of Bitcoin closing above $100,000 by Christmas has decreased to 24%, with primary bullish sentiment shifting to Q1 of 2026. The accumulation in March-expiring $130,000 and $180,000 call options suggests investors are pricing in the potential for an “explosive Q1 rally.”
Meanwhile, the Ethereum market presents a different scenario. Institutional interest in ETH has surged, especially in OTC desks over the past week. This increased spot demand suggests Ethereum might outperform Bitcoin in the short term, with analysts predicting that institutional appetite could create separate momentum for ETH’s price at the start of 2026.