Is a Bitcoin ‘Santa Rally’ Still a Possibility as BTC Surpasses $85K?

The future of Bitcoin's recovery hinges on economic factors, particularly the Federal Reserve's interest rate decisions. While options trading indicates a bullish outlook for BTC to reach $90k-$100k, the market is showing some caution. After substantial losses in November, Bitcoin enthusiasts remain hopeful for a potential Santa rally in December. However, recent analyst predictions have not gone as planned, leading to mixed sentiments amongst investors.

Key Takeaways

The potential for a Bitcoin rally is closely linked to macroeconomic developments, especially concerning the Fed's rate decisions.
Options trading indicates a bullish sentiment targeting $90k-$100k, but there's a cautious undertone due to a high put skew.
Following significant losses in November, investors are attentive to signs of seller exhaustion, keeping hope alive for a December rally.
Notably, analyst Robert Ruszale had projected a bounce off a major moving average, but recent corrections have tested that optimism.
Currently, Bitcoin is trading above $85k as traders await clarity from the Fed's upcoming rate decisions.

Bitcoin Santa Rally
Source: BTC/USDT, TradingView

Is Bitcoin's ‘Santa rally’ still possible, as BTC recovers above $85K?

Will the Recovery Continue into December?

Recent insights from the Deribit options market highlighted a significant player, previously active during a recent price decline, has gone “quiet.” This suggests they may expect a market rebound and therefore feel less need to protect against further declines. However, there remains a hint of caution in the short term, amplified by a high level of put buying.

As reported by Deribit, the prevailing trend in the options market shows bullish traders focusing on targets around $100k and $90k, while protective measures are being taken for lower levels at $84k and $70k.

Santa Rally Options Market
Source: Deribit

According to Greg Magadini from Amberdata, Bitcoin's recent lackluster performance is tied to weaknesses in the U.S. tech sector. He pointed out that this could stem from a global credit crunch, particularly as Japan raises interest rates.

Magadini provides insights into how these market dynamics may contribute to the overall cryptocurrency landscape: “The weakness might be linked to Japan's rising bond yield, indicating potential shifts in economic patterns.” He also mentioned that short-term rates play a critical role for “carry” traders, with Japan's rates remaining low amidst high debt levels.

If macroeconomic conditions shift positively, it could potentially support Bitcoin’s rise toward the $90k or $100k mark, leading to a more favorable market outlook for the cryptocurrency.