Bitcoin 'ripe for a squeeze' as options traders raise odds of sub-$70,000 Christmas

Bitcoin Bitcoin (BTC) was trading around $73,500 on Wednesday after recording five consecutive weekly losses, with options traders now pricing a greater chance of the largest cryptocurrency dropping below $70,000 by Christmas than climbing above $80,000.

Last Wednesday, the platform put the odds of an $80,000-plus finish at 53%. That has now fallen to 26%, according to Derive founder and CEO Nick Forster, while the chance of a sub-$70,000 Christmas finish has risen from 15% to 31%.

Forster told The Block that traders are becoming increasingly defensive, with downside protection (puts) costing more than equivalent upside exposure (calls). Bitcoin options trading on Derive totaled $418 million last week, a 37% increase, and puts accounted for 55% of premiums traded compared to the previous week's share of 36%, he said.

"One of the most interesting trades came just hours before Thursday's tech sell-off, when a wallet spent approximately $14K protecting 300 BTC against a fall below $60K by November 27," Forster said. "The position could pay up to $3 million if bitcoin falls below $50K."

Bitcoin dropped back below $74,000 on Tuesday following the release of October's U.S. consumer price index. Prices increased 0.4% during the month against expectations of 0.3%, and futures traders priced in further Fed tightening at the December meeting. That followed more than $1 billion in crypto long liquidations on Monday as bitcoin fell below its 50-week moving average, with Friday's U.S. producer price index release next on the economic calendar.

K33 sees scope for bitcoin liquidations on both sides

Meanwhile, perpetual futures open interest stood at around 353,000 BTC on Tuesday, according to K33's latest research report, only higher on 1.2% of trading days over the previous two years.

Over the past 30 days, open interest increased 12%, and bitcoin lost 10%, K33 Head of Research Vetle Lunde noted, with open interest climbing to levels last seen near the October 2025 peak, towards the end of the November 2025 selloff, and ahead of the August rally.

"A breakdown could trigger substantial long liquidations, while a recovery could fuel short covering, amplifying price moves as leveraged positions unwind," Lunde said, adding that the market was "ripe for a squeeze."

K33 also noted a 0.75 correlation between bitcoin and the Nasdaq over 30 days, a reading in the 99th percentile since 2020. Reviewing 16 previous strong Nasdaq rebounds from market corrections, of the nine that continued higher, bitcoin gained in eight, Lunde said, with a median return of 2.9% over 20 days. Bitcoin fell in each of the seven failed rebounds, with a median loss of 21% in the following 20 days.

Meanwhile, U.S. spot bitcoin ETFs recorded net outflows of $1.28 billion last week, with a further $296 million exiting the ETFs on Monday and Tuesday, according to data compiled by The Block, as the funds also turned negative for the year. Global bitcoin ETPs have recorded withdrawals of 31,652 BTC over the past seven trading days, according to K33.