Analysts see low odds of a Bitcoin ‘Santa rally’ in 2025 as options markets turn cautious and macro uncertainty weighs on sentiment
After a punishing 30% correction, Bitcoin has managed to reclaim and hold levels above 80,000 dollars. On the surface, that stabilization coincides with rising expectations for another 25-basis-point interest rate cut from the Federal Reserve. Underneath, however, derivatives positioning and momentum indicators suggest that hopes for a classic end‑of‑year “Santa rally” have faded significantly.
Santa rally narrative gets priced out
The year‑end rally in risk assets – often dubbed the “Santa rally” – has historically been driven by a mix of seasonal optimism, lighter liquidity, tax positioning and portfolio rebalancing. This year, that narrative appears to be losing traction in Bitcoin markets.
According to Jake Ostrovskis, Head of OTC trading at market maker Wintermute, options flow shows that the once‑dominant expectation of a strong year‑end surge has largely disappeared. He notes that call positions, particularly from larger institutions and structured product desks, have been systematically “rolled down” – in other words, traders are closing or reducing their upside exposure at higher strikes and reopening positions at more conservative targets.
This shift means topside bets are now concentrated below Bitcoin’s previous all‑time highs, signaling that large funds no longer view a powerful breakout into fresh record territory in December as the base case. Instead, the market appears to be positioning for a more muted upside into year‑end.
What options traders are actually pricing in
Options markets offer one of the clearest windows into professional expectations. Currently, traders are envisioning a moderately bullish scenario: a move toward the 100,000–118,000 dollar area is being priced as possible, but a parabolic spike back to the recent 126,000 dollar peak is not the dominant bet.
Crucially, the 25‑delta risk reversal (25RR) – a commonly used gauge of sentiment comparing demand for upside calls versus downside puts – remains in negative territory for both late November and December (around ‑4.8 and ‑4.9, respectively). Negative readings indicate that puts are more expensive than calls, reflecting heavier demand for downside protection and hedging rather than aggressive bullish speculation.
In other words, even as rate‑cut odds improve, traders continue to pay a premium to insure against further declines. For Ostrovskis, a more convincing bottom in Bitcoin would require the 25RR to at least move back toward neutral (around zero), showing that fear and hedging are easing.
Key levels: 80k as a floor, 112k as a ceiling – for now
Volume data on options strikes adds more nuance to the picture. For November expiries, the heaviest trading in put options – contracts used primarily for hedging – has been concentrated around the 80,000, 82,000 and 88,000 dollar levels. That pattern reinforces the idea that market participants broadly expect Bitcoin to defend the 80,000 dollar support zone but are not ruling out deeper intramonth dips.
By contrast, the most optimistic call activity over the past day for December expiries has clustered around the 112,000 dollar level. This strike has emerged as a kind of “aspirational” target for bulls looking for a meaningful rally into year‑end, but not an extreme melt‑up. The options board, therefore, is sketching out a range‑bound scenario with 80,000 dollars as a key support and roughly 112,000 dollars as a realistic upper band over the coming weeks.
Momentum remains deeply negative
Price alone does not tell the full story of market health. Momentum indicators still paint a gloomy picture, even after Bitcoin briefly recovered toward 89,000 dollars earlier in the week. Quantitative momentum models show readings at levels typically associated with late‑stage capitulation – situations where many weak hands have already sold, but the market has not yet flipped back into a sustained uptrend.
Analysts note that as long as momentum remains this deeply negative, rallies are more likely to be “tactical bounces” driven by short covering and opportunistic buying rather than the start of a new impulsive leg higher. A more constructive backdrop would require Bitcoin to stabilize and consolidate above approximately 85,000–86,500 dollars. Only then could a more durable ignition of bullish momentum become plausible.
ETF flows add to the choppiness
On the demand side, spot Bitcoin ETF inflows have been inconsistent. Instead of a steady stream of capital that might support a trending move, flows have been uneven and choppy. This stop‑start pattern in institutional and retail ETF demand has effectively put a lid on momentum, promoting sideways, range‑bound price action rather than a forceful breakout in either direction.
If ETF inflows were to re‑accelerate decisively – especially in conjunction with clearer macro guidance from the Fed – they could function as a powerful secondary catalyst. For now, the lack of conviction in ETF flows echoes the message from options markets: optimism exists, but it is restrained and heavily hedged.
Fed rate decision: the decisive catalyst
Looking ahead, all eyes are on the Federal Reserve’s next interest rate decision in early December. The central bank’s stance is likely to serve as the main trigger shaping Bitcoin’s year‑end trajectory.
Analyst Nic Puckrin has summarized the setup succinctly: the Fed effectively “holds the key” to whether markets experience a Santa rally or a so‑called “Santa dump.” A dovish signal – such as a confirmed 25‑basis‑point cut combined with language suggesting openness to further easing – could support risk assets, weaken the dollar and reignite demand for Bitcoin as a macro hedge and high‑beta growth asset.
Conversely, if the Fed disappoints by signaling a more hawkish stance, it could pressure liquidity conditions and risk sentiment, undermining the case for a late‑year surge. In that scenario, Bitcoin might remain locked in a choppy consolidation or even revisit lower support levels as leveraged positions readjust.
Why a Santa rally is unlikely – but not impossible
From a probability standpoint, current market structure suggests a strong Santa rally is not the default expectation:
– Options skew favors downside protection over aggressive upside bets.
– Momentum is still in capitulation territory, not in early‑bullish mode.
– ETF demand is inconsistent rather than persistently strong.
– Key resistance levels sit well below all‑time highs, reflecting tempered ambitions.
However, “unlikely” does not mean impossible. Crypto markets have a history of abrupt repricings when narrative, macro conditions and positioning suddenly align. A combination of a dovish Fed pivot, renewed ETF inflows and a momentum flip above the 85,000–86,500 dollar zone could still trigger a late‑year squeeze that catches cautious traders off guard.
What traders and investors can watch in the meantime
Until the Fed decision, Bitcoin is likely to trade within a broad, volatile range above 80,000 dollars, with sharp intraday swings but limited directional follow‑through. For both short‑term traders and longer‑term investors, several signals are worth monitoring:
1. 25‑delta risk reversal trends
A move from notably negative readings toward zero would indicate that demand for puts is easing and that the market is becoming less defensive.
2. Behavior around the 80k and 85k–86.5k zones
Sustained closes above 85,000 dollars would strengthen the case for a bottoming process. A decisive break below 80,000 would challenge the current support narrative.
3. ETF net flows over several consecutive days
A multi‑day streak of strong net inflows could indicate that larger pools of capital are finally stepping back in with conviction.
4. Volatility and skew in options expiries around the Fed meeting
Elevated implied volatility and concentrated open interest around specific strikes can signal where the market expects the largest moves and pain points.
Longer‑term context: beyond the year‑end narrative
While the Santa rally theme dominates headlines in the short term, many structurally bullish investors are more focused on multi‑year dynamics: halving‑cycle effects, increasing institutional adoption, regulatory clarity and Bitcoin’s role in diversified portfolios. For them, the main question is not whether Bitcoin finishes the year at 90,000 or 110,000 dollars, but whether the asset continues to establish higher cyclical lows and broader acceptance as a macro asset.
From this perspective, the current hesitation in derivatives and ETF flows can be seen as one of many consolidation phases in a longer uptrend. That does not eliminate the risk of significant drawdowns, but it reframes the “failed Santa rally” not as a thesis‑killer, but as a seasonal narrative that did not materialize under tightening macro constraints.
Risk management in a high‑uncertainty environment
Given the convergence of macro uncertainty, lingering negative momentum and elevated volatility, disciplined risk management remains crucial. Over‑reliance on seasonal patterns like the Santa rally can be dangerous when they clash with real‑time data from options markets, liquidity conditions and central‑bank policy.
Market participants may consider position sizing, diversification, hedging strategies and clear invalidation levels more important than chasing a calendar‑based narrative. The current setup highlights how quickly consensus expectations – such as a year‑end melt‑up – can be “priced out” once professional traders start trimming exposure and paying up for protection.
Bottom line
Bitcoin has recovered from its steep 30% drawdown and is holding above 80,000 dollars, but the ingredients for a classic Santa rally are not firmly in place. Options markets show capped upside expectations and strong demand for puts, momentum remains deeply negative, and ETF inflows lack consistency.
The decisive factor is likely to be the Federal Reserve’s next rate decision. Until then, Bitcoin is expected to experience choppy trading above key support, with the balance of probabilities tilted toward consolidation rather than a euphoric, year‑end surge.
This analysis is for informational purposes only and should not be interpreted as investment or trading advice. Buying, selling or trading cryptocurrencies involves substantial risk, and every participant should conduct independent research and consider their own financial situation and risk tolerance before making any decisions.