Podcast Ep.316ㅡWhy did Bitcoin miss the Christmas rally this year… Signals from the derivatives market

As 2025 approaches the end of the year, the Bitcoin market once again becomes a notable exception among strong traditional assets. Traditionally, December under the banner of the “Christmas rally” tends to see risk assets like US stocks experience upward movements. However, this year’s year-end defied expectations, failing to show a clear upward trend, exhibiting a combination of cyclical characteristics and macroeconomic influences. According to a report released by Kaiko Research, Bitcoin performed strongly during past boom-bust cycles, but this time it showed relative weakness compared to traditional assets. Especially during the recovery phase after the October crash, US stocks successfully rebounded, but Bitcoin has yet to recover to similar levels.

Bitcoin’s December performance has historically surged over 30% in years with strong momentum, but in weaker cycles, it has also recorded declines exceeding 15%. This indicates that year-end is less about offering new directions and more about continuing existing trends. In fact, the fourth quarter is historically Bitcoin’s strongest quarter, but when looking specifically at December, its performance each year tends to be irregular. This suggests that even at year-end, Bitcoin continues to exhibit price behavior centered around cyclical patterns.

Volatility indicators explain the background of this year’s Christmas rally falling short. After sharp price swings in early December, Bitcoin’s realized volatility soared above 60%, but implied volatility actually declined, resulting in a negative spread of about 6 percentage points. This structure hints that the market is more focused on stability rather than short-term directional moves. A similar volatility structure appeared in March this year, which was followed by volatility compression and a downward trend.

Spot trading and derivatives market positions also support this interpretation. The spot trading volume of BTC and ETH has shrunk to around $200-300 million, a significant decrease from over $400 million at the beginning of the year. In the derivatives market, open interest in BTC contracts remained between $70 billion and $90 billion throughout December, avoiding deleveraging but not expanding significantly. Conversely, altcoin open interest increased slightly, indicating only selective speculative demand.

The options market also shows no clear directional positioning. As of the December 26 expiry, both call and put options are concentrated near at-the-money strike prices, with the highest trading concentration around $85,000, which is interpreted as hedging rather than aggressive buying. Additionally, the options trading volume on December 26 reached about $600 billion, the most active, but the call-put ratio remains relatively balanced rather than skewed bullish. This signals that the market is more focused on managing existing positions rather than pursuing new directions. In summary, Bitcoin at year-end this year did not exhibit the strong seasonal rally typical of traditional assets but instead highlighted a development pattern driven by cyclical, macroeconomic, and risk management factors.