In brief
- Options traders are piling on bullish bets toward a $100,000 retest by Christmas.
- Analysts cite poor year-end liquidity and declining volatility as key reasons a major Santa rally is unlikely in the coming weeks.
- The heaviest concentration of bullish call options is for March 2026 at strikes of $130,000 and $180,000, indicating where traders see real potential.
The Federal Reserve’s interest rate cut this week is aligning with a steady spike in bullish options bets.
The most active strike in the options market is the $100,000 call option expiring on December 26, with over 18,360 bullish contracts open compared to just 2,540 bearish puts, according to a Wednesday tweet from options analytics platform Laevitas.
However, the structure of these bets suggests traders are positioning for a limited, tactical bounce rather than an unbounded Santa rally. The large open interest is composed of strategies like long call condors and bull call spreads, which share a view of limited upside potential.
The central bank also announced it will begin purchasing roughly $40 billion per month in short-term Treasury bills starting Friday.
It’s a technical move designed to manage liquidity in the banking system and maintain firm control over its benchmark interest rate target, it said.
Despite those developments, a tempered outlook is being reflected across other market data points.
Though the 25-delta options skew improved from -8% to -5% in two weeks, it remains negative, indicating continued demand for downside protection despite the post-Fed optimism.
As such, the potential for a relief rally is capped at $99,000, according to CryptoQuant’s Wednesday report.
Bitcoin is currently trading around $89,500, down 2.4% over 24 hours and roughly 5.5% below its intraday high of $94,267 following the Fed decision, according to CoinGecko data.
So, what’s driving the drop?
“With Christmas and year-end settlement approaching, this period historically marks the weakest liquidity conditions in crypto,” Adam Chu, chief researcher of options analytics platform GreeksLive, told Decrypt. “Market activity tends to be subdued, limiting the near-term momentum for any sustained rally.”
The decline in implied volatility, Chu added, which notes reduced expectations for near-term price swings, further explains why a Santa rally is unlikely.
Instead, the most significant bullish conviction is being deferred to early 2026.
“The chance of Bitcoin reclaiming and settling above $100,000 by Christmas now sits at around 24%,” Sean Dawson, head of research at on-chain options platform Derive, told Decrypt.
“Bulls are levering up for an explosive Q1,” Dawson said, pointing to a heavy build-up of call options at the $130,000 and $180,000 strikes for March of next year as evidence of where traders see the real opportunity.
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