Panic sentiment cools, options market indicates that the Bitcoin crash is likely to end

The strong selling pressure on Bitcoin over the past few weeks seems to be easing, giving people hope that this wave of decline in the cryptocurrency market is nearing its end. Bitcoin held steady around $88,000 on Monday, recovering from a seven-month low. The previous plunge triggered massive liquidations and caused the entire crypto asset market to evaporate over $1 trillion in market value. Trader sentiment remains cautious, reflecting the market's continued fragility. Bitcoin could still record its worst monthly performance since 2022 this month, while ETFs investing in Bitcoin may see the largest monthly outflow since their launch. However, after this mild rebound, some see reasons for optimism. In the options market, the cost of buying downside protection has significantly decreased. Caroline Mauron, co-founder of Orbit Markets, stated: The premium of one-month put options relative to call options has dropped from 11% (a peak since 2025) reached last Friday to about 4.5%. This indicates that pressure levels have significantly decreased, and investors expect that we have temporarily hit the bottom. However, the market is expected to remain in a wait-and-see mode until the Federal Reserve makes a decision. Long-term holders who sold above $100,000 believe the current level is too low and will not continue to sell, returning to a holding state; while investors trying to accumulate are waiting for Bitcoin to drop below $85,000 again. Another key indicator is Bitcoin's 14-day Relative Strength Index (RSI), which has significantly declined since early October and is currently at 32. An RSI of 30 or below is typically considered oversold, while 70 or above indicates the opposite. Meanwhile, the implied volatility of Bitcoin options, which measures expected price fluctuations, has returned to April levels, when tariff-related news triggered a sell-off. Noelle Acheson, author of the "Crypto is Macro Now" newsletter, pointed out: This suggests that traders are preparing for a breakout volatility, which could be in either direction. However, the option skew indicates that bets on a rebound from current levels are strengthening compared to further declines. Media reports show that global cryptocurrency exchange-traded products (ETPs) experienced over $6 billion in outflows in November, marking the largest monthly outflow on record since 2018. Nevertheless, most investors remain unmoved in their positions. The total outflow from U.S. Bitcoin ETFs this month reached $3.7 billion, accounting for about 3% of their total assets under management of $110 billion. According to a report by S3 Partners LLC, short positions in BlackRock's Bitcoin fund (IBIT) have significantly decreased. BTC Markets analyst Rachael Lucas noted that the moderate trading volume on Monday may also suggest that selling pressure is easing. She estimates that Bitcoin's short-term support level is at $80,000, with resistance ranging between $90,000 and $95,000. As investors face multiple concerns regarding the cooling U.S. labor market and large corporations heavily investing in artificial intelligence capital expenditures, Goldman Sachs' risk appetite indicator shows that speculative assets, including Bitcoin, are facing increasing pressure Such a significant decline reflects a waning risk appetite, and in extreme cases, it may even indicate that the market has experienced an excessive drop. Goldman Sachs strategists wrote: Stock market valuations are too high and the long positions make the market more susceptible to shocks, especially in sectors driven more by retail investors, such as unprofitable tech stocks. U.S. tech stocks drove global markets higher on Monday as traders kicked off a data-heavy week. According to interest rate futures, investors currently believe there is an 80% chance of a rate cut at the Federal Reserve's December meeting, up from just 42% a week ago. Federal Reserve officials remain divided on whether to cut rates again after reductions in September and October