Bitcoin Faces Bull Trap Risk Despite Spot Metric Spike

Bitcoin is navigating its most challenging period in months, having recorded its fourth consecutive weekly loss – the longest sustained downtrend since June 2024. According to CoinGecko data, the world’s largest digital asset is currently trading at $87,400, representing a modest 6% recovery from the November 21 low of $82,100 and a 1.8% gain over the past 24 hours. However, these minor gains do little to offset the broader bearish trend, with Bitcoin’s fourth-quarter performance currently showing a 24.43% loss, potentially marking its worst quarterly performance since 2018.

Sean Dawson, head of research at options analytics platform Derive, encapsulates the prevailing market sentiment, telling Decrypt, “I expect a rough ride into Christmas.” This pessimistic outlook reflects the broader crypto market pressures, where most digital asset treasuries are trading below their net asset value, limiting their accumulation capabilities. The same bearish pattern extends to spot Bitcoin and Ethereum exchange-traded funds, which remain firmly in negative territory, compounding the market’s challenges.

Amid the prevailing gloom, a critical on-chain metric offers a glimmer of hope for Bitcoin bulls. The aggregate spot bid-ask delta at 10% depth has surged to its second-highest level in 2025, indicating robust dip-buying activity and potential absorption of selling pressure. This development carries significant historical weight – the last time this indicator spiked following a sustained downtrend in March and April, it helped form a market bottom that catalyzed a substantial 64% bull run.

Yet this optimistic signal conflicts sharply with activity in the options market, where traders are demonstrating considerable caution. Dawson notes a “negative skew in the options market,” with traders “loading up on puts to protect downside” – particularly for the December 2025 expiry. The data reveals a “large build-up of puts in the $80,000 to $85,000 range,” suggesting widespread expectations of further price deterioration. This hedging activity creates the conditions for what analysts describe as a potential bull trap below $80,000, where temporary price recoveries could lure buyers before another downward move.

Dawson articulates this concern clearly: “Pessimism has peaked, but I’d be cautious of walking into a bull trap.” His analysis suggests Bitcoin could slip into the “mid to high $70,000 range before recovering to roughly $90,000 by the end of the year,” contingent on the Federal Reserve avoiding hawkish policy tones.

The Federal Reserve’s evolving policy stance represents a critical variable in Bitcoin’s near-term trajectory. Recent weeks have witnessed a dramatic repricing of Fed policy expectations, with the odds of a December rate cut surging from 40% last week to nearly 70% today. This shift aligns with Bitcoin’s recent recovery from its November lows and provides fundamental support for potential price stabilization.

However, Dawson injects a note of caution regarding the timing and scope of monetary policy changes. He warns that “fears of sticky inflation” could mean “a slower transition into quantitative easing than previously expected, worrying traders.” This concern highlights the delicate balance the Fed must strike between combating inflation and supporting economic growth – a balance that will directly impact risk assets like Bitcoin.

The coming weeks feature several pivotal Fed decisions that could determine market direction. The central bank’s conclusion of quantitative tightening on December 1, followed by its interest rate decision slated for December 10, will provide crucial signals about the monetary policy trajectory. These developments occur against a backdrop of improving but still fragile market sentiment, which remains in “extreme fear” territory despite the weekend bounce.

Despite the current bearish environment, some analysts maintain longer-term optimism. Dawson, while bearish for the remainder of 2025, projects a recovery to $100,000 by the first quarter of 2026. This outlook suggests that the current downturn may represent a temporary correction rather than a fundamental breakdown in Bitcoin’s value proposition.

The conflicting signals between the spot market’s dip-buying enthusiasm and the options market’s defensive positioning create a complex landscape for traders and investors. The spike in the aggregate spot bid-ask delta indicates underlying demand strength that could support prices, while the heavy put accumulation in the $80,000-$85,000 range suggests expectations of further testing of support levels. How these forces resolve will likely depend on both technical factors and the broader macroeconomic environment shaped by Federal Reserve policy.

As Bitcoin navigates this critical juncture, market participants face the challenge of distinguishing between temporary volatility and more sustained trends. The historical precedent of the March-April bottom formation following a similar spot metric spike offers hope, but the current options market activity and macroeconomic uncertainties introduce additional complexity to the recovery equation.