The liquidity contraction during Christmas week is already evident. Last night, the open interest of BTC perpetual contracts plummeted by $3 billion, and ETH also dropped by $2 billion. This is not a signal to add positions but rather the market actively deleveraging.

The key factor is the expiration of options on Friday—300,000 BTC options (worth $23.7 billion) along with IBIT options are expiring simultaneously, with over 50% of Deribit's open interest expiring on the holiday. Looking at the strike price distribution, the range between $95,000 and $100,000 is the biggest pain point, while open interest in $85,000 puts is decreasing, indicating limited market optimism for the "Christmas rally."

The risk reversal indicator shows some easing of sentiment, but overall remains bearish. Coupled with year-end tax-loss harvesting possibly amplifying volatility in low liquidity, the probability of Bitcoin fluctuating within this range in the short term is high. Historically, Christmas week typically sees a 5%-7% volatility, but with a more fragile liquidity environment this time, the risk of two-way squeezes cannot be ignored.

However, based on past experience, such holiday market conditions often revert to the mean after liquidity returns. Currently, there is no clear breakout direction, so the outlook remains for range-bound oscillation.