Traders are increasingly bracing for downside risks, with a significant build-up of put options signaling expectations that bitcoin could dip below $85,000.

Crypto markets remained under pressure as bitcoin hovered near $87,000, with options positioning and analyst commentary pointing to rising risks of a deeper downturn heading into early 2026. The recent rebound appears to be losing momentum, with price action increasingly characterized by short-lived rallies followed by renewed selling, CoinDesk reported Wednesday.

Bitcoin briefly climbed to $90,000 late Wednesday before slipping back under $87,000, underperforming equity markets amid ongoing macro uncertainty. Traders are positioning for further declines, particularly around the Dec. 26 options expiry.

Derivatives data show a heavy concentration of put options at the $85,000 strike, suggesting expectations that bitcoin could test that level in the near term. Thirty-day implied volatility has risen toward 45%, while skew remains firmly negative, reflecting strong demand for downside protection. Longer-dated skew is also anchored near -5%, signaling bearish sentiment extending into the first half of next year, according to Derive.xyz.

“There’s clear defensive positioning going into year-end,” said Alex Kuptsikevich, chief market analyst at FxPro. “The uptrend from late November has been broken, and the market is now trading more like it did during the October sell-off, with sharp rebounds failing to gain traction.”

Ether (ETH) shows a slightly more balanced profile. While short-dated ETH skew remains negative, longer-dated skew is closer to neutral, indicating less conviction around a sustained downturn. Traders have accumulated a sizable cluster of puts around the $2,500 level for the Dec. 26 expiry, highlighting a key area of concern.

Beyond near-term positioning, some analysts warn that bitcoin’s long-term cycle may be turning. Bloomberg Intelligence commodities strategist Mike McGlone suggested that the rally above $100,000 earlier this year could sow the seeds for a deeper retracement.

“Bitcoin’s surge toward six figures may have sparked a cycle back toward $10,000, potentially in 2026,” McGlone said, noting that periods of extreme wealth creation are often followed by sharp reversions. He added that the next economic downturn could hit highly speculative digital assets with effectively unlimited supply.

Despite the warnings, McGlone noted that bitcoin has remained relatively resilient, down only about 5% in 2025 through mid-December. Data from CryptoQuant indicates short-term holders have been sitting on losses for over a month, while Glassnode estimates that long-term holders have sold roughly 500,000 BTC since July.

Kuptsikevich said the Federal Reserve’s rate cuts this year were less of a direct catalyst and more a signal that monetary tightening had ended, allowing investors to maintain risk exposure during drawdowns.

“That patience helped push bitcoin to new highs earlier in the year,” he said. “But leverage remains elevated, and the October liquidation wave exposed how fragile price discovery can be when positioning gets crowded.”

Looking ahead, geopolitical risks and leverage conditions are expected to be key drivers into 2026. For now, markets appear braced for volatility, with downside risks firmly in focus as the year draws to a close.