QCP Capital: Year-End Tax Flows Could Fuel Volatility As BTC And ETH Open Interest Declines
In Brief
QCP noted that reduced liquidity, institutional deleveraging, and potential year-end tax-loss selling have kept Bitcoin range-bound, with volatility likely to persist into year-end.
Singapore-based digital asset firm QCP Capital reported that gold has reached new all-time highs, while Bitcoin has remained largely range-bound as the Christmas week approaches. Market liquidity has noticeably decreased as traders close positions ahead of the holidays, with Bitcoin perpetual open interest across major exchanges dropping by roughly $3 billion overnight and Ethereum perpetual open interest falling by about $2 billion, indicating that risk is being reduced rather than shifted elsewhere.
Although leveraged positions have declined, the contraction in market depth keeps the potential for sharp price moves elevated. Historically, Bitcoin has experienced 5 to 7% fluctuations during the Christmas period, often linked to year-end options expirations rather than new fundamental developments. This Friday’s record options expiry reflects that pattern, with approximately 300,000 Bitcoin option contracts, equivalent to $23.7 billion, and 446,000 IBIT option contracts scheduled to expire.
The Boxing Day expiry alone represents more than half of Deribit’s total open interest, with the highest concentrations at strike prices of $100,000 and $85,000, and a maximum pain point around $95,000. Over the weekend, spot prices have stabilized, with open interest for the $85,000 puts declining from around 15,000 to roughly 12,000, while the $100,000 calls have remained relatively steady at about 17,000. The $100,000 call, associated largely with a call condor structure, now appears more speculative but still suggests some lingering optimism for a Santa rally, albeit with limited conviction.
BTC Market Stress Eases As Risk Reversals Normalize Ahead Of Year-End Options Expiry And Holiday Tax Flows
Indicators of market stress are also showing signs of easing as spot prices consolidate. Bitcoin risk reversals point to a less bearish sentiment compared to the past 30 days. While the curve retains a slight put skew, risk reversals are gradually normalizing toward levels seen before October 10th. A clearer view of downside exposure is expected after Friday’s options expiry, particularly regarding whether the large $85,000 December puts will be rolled forward, closed out, or replaced further down the strike curve.
In addition to options-related flows, holiday price movements may be influenced by tax-loss harvesting ahead of the December 31st deadline, noted QCP. Unlike equities or exchange-traded funds (ETFs), where wash-sale rules restrict immediate re-entry, cryptocurrency investors can realize losses for tax purposes and re-establish positions immediately. In thin markets, this dynamic can amplify short-term volatility rather than suppress it.
Nevertheless, holiday-driven price movements have historically tended to revert to the mean. Similar to low-liquidity weekend spikes that retrace when markets reopen, price action during Christmas week typically diminishes as liquidity returns in January. Unless there is a decisive breakout in either direction that resets positioning and expectations for 2026, the cryptocurrency market is likely to remain range-bound, influenced by declining leverage, mechanical flows, and a mix of competing market narratives.
At the time of reporting, Bitcoin is trading at $87,448, reflecting a decline of more than 1.85% over the past 24 hours. The cryptocurrency reached a high of $90,260 and a low of $87,111 during this period. The total market capitalization of all cryptocurrencies stands at $2.96 trillion, marking a 1.65% decrease over the last day. Meanwhile, the total trading volume across the cryptocurrency market in the past 24 hours has risen to $99.55 billion, representing an increase of approximately 21.55%.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
