Bitcoin slipped below $88,000 on Tuesday as the crypto market braces for the largest single-day options expiry in history. The leading cryptocurrency traded at $88,088, down 0.7% over 24 hours and roughly 30% below its 2025 peak.
The decline extends what's shaping up to be Bitcoin's worst quarter since 2018. Data from CoinGlass shows BTC is down more than 22% in Q4, a stark reversal from the optimism that prevailed earlier in the year.
The Record Options Expiry
On Friday, December 26, Bitcoin faces the biggest options expiry in market history. Approximately $23.6 billion in Bitcoin options and $3.8 billion in Ethereum options are set to expire on Deribit—a combined $27.4 billion that could trigger significant volatility.
Many traders are sitting on the sidelines, reluctant to take new positions until the expiry passes. The holiday season compounds the caution, as December typically sees lower volumes while traders reduce exposure and funds close their books for the year.
Fear Dominates Sentiment
The Crypto Fear & Greed Index has plunged to 24, firmly in "extreme fear" territory. Liquidations jumped 11% to $222 million over 24 hours, overwhelmingly hitting long positions as leveraged bulls got squeezed.
Total crypto market capitalization slipped 0.8% to $3.07 trillion, with weakness extending beyond Bitcoin to altcoins. Ethereum dropped below $3,000, while DeFi tokens and Layer 1 competitors posted even steeper losses.
The Bank of Japan Shadow
Adding to the pressure is the Bank of Japan's December 19 rate hike to 0.75%—the highest in 30 years. Higher Japanese rates unwind the yen carry trade, forcing investors who borrowed cheap yen to invest in risk assets to sell those positions.
Past BOJ hikes have coincided with sharp Bitcoin selloffs. The March and July 2025 rate signals triggered 22% and 31% crypto declines, respectively. With rates now at multi-decade highs, the carry trade unwind may have further to run.
Tax-Loss Selling
December also brings tax-loss harvesting, as investors sell losing positions to offset gains before year-end. For those who bought near Bitcoin's highs, selling now locks in losses that can reduce tax bills—adding another source of selling pressure.
What Analysts Are Watching
Key levels to monitor:
- $85,000: Psychological and technical support
- $80,000: A break below could trigger panic selling
- $104,000: Only a clean weekly close above this level would shift the bearish outlook
The Bottom Line
Bitcoin's year-end swoon reflects a market caught between massive technical events (options expiry), macro headwinds (BOJ), and seasonal dynamics (tax selling, low volume). For long-term holders, the volatility is noise. For traders, the next week demands caution—the record options expiry could spark violent moves in either direction.
