Despite the Federal Reserve's anticipated 25 basis point rate cut, Bitcoin and other altcoins have experienced a decline. A decrease in risk appetite within the cryptocurrency markets has led to Bitcoin retreating towards the $90,000 mark.
A pullback following a brief surge above $94,500 on Tuesday caused a short squeeze in Bitcoin. The cryptocurrency failed to break through the resistance level that has been limiting BTC for the majority of the past three weeks. This rejection sent BTC back to the middle of its established range, where it has been trading for a month.
Shifting Expectations for Year-End Rally
At this juncture, expectations for a year-end Christmas rally for Bitcoin have been postponed. Data indicates that expectations for a year-end Christmas rally in the Bitcoin options market have weakened, with major bullish bets now shifting towards the first quarter of 2026.
Consequently, Bitcoin options traders are lowering their short-term outlook for a Santa Claus rally and are instead concentrating on the first quarter of 2026 for a potential uptrend. Options traders are targeting Bitcoin price levels between $130,000 and $180,000 for the first quarter of 2026.
Expert Analysis on Market Liquidity
Sean Dawson, head of Derive research, commented on the current market sentiment, stating, "There's about a 24% chance Bitcoin will stabilize above $100,000 this year."
Experts are citing year-end liquidity depletion and decreased volatility as the primary reasons why a significant Christmas rally is unlikely in the coming weeks. Adam Chu, senior analyst at GreeksLive, explained, "The year-end closing period is the least liquid period." He further added that market activity is limited towards the end of the year, making it challenging for short-term upward momentum to develop.