Bitcoin Rally Lacked Conviction: Glassnode Warns of Fragile Breakout

When Bitcoin surged roughly 8% in mid-January to approach $97,600, the immediate reaction in the derivatives market appeared unequivocally bullish. According to Glassnode’s analysis, the 1-week 25-delta skew—a key metric measuring the relative demand for puts versus calls—shifted sharply from what the firm described as “deep put territory” toward neutral. This indicated a significant reduction in demand for near-term downside protection. Concurrently, the options volume put/call ratio plummeted from 1 to 0.4, signaling a dramatic surge in call buying activity over puts. On the surface, this data painted a picture of a market rapidly flipping bullish, with traders aggressively positioning for further upside in the immediate future.

However, Glassnode issued a crucial warning against misinterpreting this short-dated activity. “Careful though,” the firm noted in its January 23 analysis thread. “Near-dated call demand is often misread as directional conviction.” The analytics firm framed the critical question not as whether calls were bought, but how concentrated that demand was in the very short term. This distinction is vital because a surge in weeklies or other near-expiry contracts can represent speculative, tactical bets rather than a fundamental shift in market sentiment. It is the difference between a trader betting on a brief momentum spike and an investor building a longer-term position based on a high-conviction thesis.

Beyond the frothy front-end activity, a markedly different story unfolded in longer-dated options, revealing the rally’s fragile foundation. While the 1-week skew normalized, the 1-month 25-delta skew “only moved from 7% to 4% at the low,” Glassnode reported. This meant it remained in “put asymmetry,” indicating that traders continued to pay a premium for downside protection a month out. The signal from the 3-month horizon was even more definitive. The shift in the 3-month 25-delta skew was minuscule—less than 1.5%—and it “stayed firmly in put territory.”

This stark divergence between the 1-week and the 1-month/3-month skew is, for Glassnode, the core of the analysis. It cleanly separates transient “flow” from enduring “risk pricing.” The market was happy to participate in short-term upside via weekly calls, but it refused to reprice risk across the entire curve. The persistence of put skew at longer maturities shows that, despite the price rally, the market’s baseline expectation continued to price in asymmetric downside risk. This lack of repricing suggests traders did not extend their near-term optimism into a higher-conviction, longer-horizon view, viewing the move to $97,600 as an opportunity to hedge or monetize rather than a new regime.

The behavior of implied volatility (IV) during the rally reinforced the narrative of a tactical, unconvincing move. “Layering in ATM implied volatility, we see vol being sold as price moved higher,” Glassnode wrote. “Gamma sellers monetized the rally. This is not the volatility behavior typically associated with sustained breakouts.” In a high-conviction breakout, one would expect volatility to be “bid” or bought, as traders anticipate larger price movements and pay up for options. The fact that IV was sold indicates market makers and sophisticated traders were collecting premium, effectively betting against a sustained, volatile uptrend. This combination of front-end call buying and concurrent volatility supply is classic behavior for tactical positioning, not a structural shift.

Glassnode concluded by outlining the checklist for a cleaner, more sustainable Bitcoin breakout. “An ideal breakout setup combines spot pressing key levels, skew pointing higher with conviction across maturities, and volatility being bid,” the firm stated. “Last week’s move didn’t meet those conditions.” For traders watching to see if BTC can reclaim the $97,600 level, the implication is clear: the key signals to monitor are not just spot price action. The true test will be whether longer-dated skew begins to lift definitively out of put territory and whether implied volatility starts to get bid, not sold, as those key levels are tested again. At the time of Glassnode’s analysis, with BTC trading at $89,297, the market had yet to demonstrate that broader, high-conviction shift.