Bitcoin Holds Firm Amid Macro Headwinds and Options Expiry

Bitcoin CRYPTO000BTC

As the trading week concludes, Bitcoin finds itself at a critical juncture. The leading cryptocurrency is defending a key price zone, demonstrating resilience in the face of challenging macroeconomic conditions and significant recent declines. The interplay of central bank policy, derivatives market activity, and institutional demand is proving more significant than daily price fluctuations.

The medium to long-term view from major traditional finance players remains largely optimistic. Several large banks interpret the current phase as a consolidation rather than the start of a prolonged downtrend.

Citigroup has issued a 12-month price target of $143,000. The bank cites diminishing regulatory risks in the United States and continued adoption by institutional investors as key drivers. In a bullish scenario, Citigroup sees potential for prices to reach $189,000, while its pessimistic scenario places a floor around $78,000.

JPMorgan also anticipates significantly higher prices for Bitcoin over the next 6 to 12 months, naming $170,000 as a target. Analysts note signs that the recent deleveraging cycle within the crypto market may be nearing its conclusion.

Jurrien Timmer of Fidelity Investments offers a more cautious perspective. Should the cooling-off period extend, he considers tests of lower levels between $65,000 and $75,000 in 2026 a possibility before a new upward trend emerges.

Concurrently, the regulatory landscape is gaining clarity. In 2025, U.S. spot Bitcoin ETFs recorded net inflows totaling $22.47 billion—a clear signal of sustained interest from the traditional finance sector despite heightened volatility.

On the legislative front, the GENIUS Act and the CLARITY Act are coming into focus. Both legislative initiatives aim to establish a unified framework for payment stablecoins and the regulatory classification of digital assets. These guidelines are expected to be largely in place by 2026, which should reduce regulatory uncertainty and the associated risk premium for crypto investments from a market perspective.

Macro Pressure from Japan and a Major Options Event

Today's focus centered on the Bank of Japan's interest rate decision. The central bank raised its short-term policy rate by 25 basis points to 0.75%, marking the highest level in nearly three decades. While higher interest rates typically pressure risk assets, Bitcoin displayed notable strength, recovering from daily lows just above $86,000 to move back toward $88,000.

Market observers note that the BoJ's move was largely anticipated. Simultaneously, the Japanese yen weakened following the decision, a dynamic often associated with increased demand for US dollar-denominated assets like Bitcoin.

A substantial options expiry is also shaping market dynamics. On the Deribit derivatives exchange, Bitcoin options with a total notional value of approximately $2.7 billion are expiring today. Key metrics include:

• Max Pain Price: $88,000
• Put/Call Ratio: 0.8
• Total Open Interest: ~$52.5 billion

The Max Pain level—the price at which the maximum number of options expire worthless—is situated at $88,000. The spot price's movement within this range suggests a "pinning" effect from the derivatives market, where large positions temporarily stabilize the price around this level instead of triggering additional volatility.

Despite a weekly decline of roughly 5%, Bitcoin successfully defended its recent multi-week low near $84,500. This has helped establish a technically supported floor. Current data shows the price trading around $88,125, representing only a marginal daily gain and remaining notably below both the 52-week high and the 50-day moving average.

Underlying Strain Revealed in On-Chain Metrics

Beneath the surface, market conditions appear strained. On-chain data from mid-December indicates that approximately 6.7 million BTC are currently held at a loss, equating to about 23.7% of the circulating supply.

The distribution of these underwater holdings is noteworthy:

• 10.2% are held by long-term investors
• 13.5% are held by short-term holders

This shows that short-term oriented market participants are bearing the brunt of the current paper losses. Historically, a high proportion of loss-making positions is often viewed as a potential precursor to a market bottom, as weak hands face pressure while conviction-driven investors tend to continue accumulating.

Selling pressure remains palpable in the zone between $93,000 and $120,000, where increased supply continues to stifle breakout attempts. A positive signal is that funding rates for Bitcoin futures on major exchanges remain in positive territory, indicating that long positions still dominate despite the recent correction. For Ethereum, however, short positioning has strengthened following its slide below $2,800.

Conclusion: A Significant Year-End Threshold

As this trading week ends, Bitcoin is maintaining its footing around $88,000. This stability persists despite a major options expiry, sharp pullbacks in recent weeks, and a historic rate hike from Japan. In the near term, the price appears contained within a narrow range by the Max Pain level and positive funding rates, while a significant portion of the supply in loss paints a picture of a tense but not collapsing market.

Simultaneously, substantial ETF inflows, ambitious price targets from major banks, and a clarifying regulatory environment support the interpretation that the current phase represents a consolidation within a broader upward trend. The critical factor for the coming months will be whether Bitcoin can use the current price zone as a stable foundation and subsequently achieve a sustained breakout above the resistance area beginning around $93,000.