Bitcoin's Year-End Cleanup: 45% of Options Cleared, Market Shifts from Defense to Offense

Executive Summary: A New Year, a New Structure

In early 2026, Bitcoin(BTC) experienced an unprecedented market “clear-out.” The options settlement event in the final week of the year wiped out over 45% of open positions (dropping from 579,000 BTC to 316,000 BTC), this reset completely broke the market’s structural constraints. Rather than a collapse, it was a deep systemic adjustment—legacy positions were cleared out, and at the start of the new year, the market welcomed a cleaner, more transparent signal foundation.

After experiencing continuous outflows at the end of 2025, spot ETFs are now rebounding in recent weeks, with institutional buying re-emerging. Futures open interest has also gradually recovered from its peak decline of over $50 billion, as traders are methodically rebuilding their positions. Interestingly, the options market has shifted from purely defensive hedging to active participation in upside moves—a subtle but crucial change in market sentiment.

Currently, BTC price hovers around $93.05K, with the battle between support and resistance entering a new phase.

On-Chain Perspective: Profit Pressure Eases, a New Game Begins

Final Act: Short-term Holder Cost Basis Becomes the Key

In the first week of January, Bitcoin broke out of a consolidation range around $87K, surging directly to $94.4K, an 8.5% increase. What lies behind this rally? On-chain data provides a clear answer: profit-taking pressure has significantly eased.

By the end of December, the 7-day realized gains had sharply declined from an average of over $1 billion per day at the end of Q4 to $183 million, indicating that long-term holders had halted large-scale selling. The pressure dissipated, paving the way for a rebound.

But the rebound is not without obstacles. When the price rose to $94.4K, the market entered a new supply pressure zone. According to UTXO realized price distribution data, investors who bought between $92.1K and $117.4K—so-called “peak-top bagholders”—are now near their cost basis, opening the possibility of selling.

This means every upward attempt will encounter increasingly dense “stop-loss” sell orders. To break through this resistance, the market needs time to absorb this supply rather than rushing higher.

Short-term Holder Cost Basis: The $99.1K Critical Level

To determine whether the rebound will turn into a genuine bull market revival, the (STH Cost Basis) model is the best indicator. This metric fell to the lower bound of -1 standard deviation (around $99.1K) in December, typically signaling that confidence among recent buyers has bottomed out.

The current test is: can the price hold above and break through this line?

Historical comparison is straightforward. After a failed breakout in Q1 2022, Bitcoin entered a prolonged bear market. If this pattern repeats—i.e., the price repeatedly fails at this level—the risk of a deeper downturn increases significantly.

Looking at the Short-term Holder MVRV indicator, it has rebounded from a bottom of 0.79 to 0.95, meaning recent investors are still about 5% unrealized loss. To truly reverse the trend, MVRV needs to break above 1.0, indicating short-term holders are back in profit. If this does not happen, the probability of a prolonged bear market rises.

Off-Chain Perspective: Signals of Institutional Return Flicker

Corporate Reserves: Stable but Not a Driving Force

Enterprise Bitcoin reserves behave somewhat “intermittently.” While there have been several large weekly net inflows exceeding thousands of BTC, these are mostly event-driven—mainly occurring during price pullbacks and consolidations.

In the long run, corporate reserves provide a stable cushion rather than a bull market engine. Without sustained structural accumulation, this demand appears more reactive than committed for the long term.

Spot ETF: Reigniting Vitality

Compared to the sporadic activity of corporate reserves, the story of US spot ETFs is more noteworthy. The continuous net outflows at the end of 2025 raised concerns about waning institutional interest. But recent data points to a reversal.

Positive net inflows have become more frequent, especially after the price stabilized from lows around $80K, with ETF buying activity picking up again. Although current inflow levels haven’t yet reached the peaks seen during mid-term accumulation phases, the shift in direction itself is a strong signal—institutional investors are moving from “selling” to “buying in.”

Derivatives Market: From Deleveraging to Precise Engagement

Futures Rebuilding: Orderly, Not Aggressive

Futures open interest experienced a sharp contraction at year-end, shrinking from over $50B at cycle highs. Recently, it has begun to slowly climb again. This process is critical—it shows traders are actively, rather than passively, rebuilding their exposure.

The rebuilding pace is steady: a gradual bottoming process when prices were in the $80K-$90K range, without aggressive leverage increases. This restraint indicates that market participants are becoming more cautious but also more proactive.

The gentle rise in open interest suggests a reawakening of risk appetite, but not yet at dangerous levels of excitement.

Options: From Hedging to Active Participation

The year-end options liquidation marked a watershed. Over 45% of open positions were cleared, with all legacy, passive positions exited. This means that every new position since January is based on active judgment of the current market, not old remnants.

The environment post-liquidation is cleaner—market participants’ true intentions are now more transparent.

Implied Volatility: Bottoming and Rebounding

During the holiday period, implied volatility(IV) fell to recent lows. Since late September, this was a relative extreme. But after the New Year, buyers began actively establishing volatility positions, especially on the upside.

While the overall IV curve has risen somewhat, it remains subdued—across maturities from 1 cycle to 6 months, it hovers within a narrow 42.6%-45.4% range. The volatility skew indicates a market expecting relative calm, with little anticipation of extreme swings at the start of the year.

Skew Normalization: From Defense to Offense

The most telling sign of sentiment change is the options skew(skew). Over the past month, the premium for put options relative to call options has narrowed, with the 25-delta skew becoming less negative. This subtle but profound shift indicates: the market is moving from “buying insurance” to “seeking upside gains.”

Defensive hedging is gradually being peeled away, and traders are now willing to pay for upside exposure. This reflects growing confidence and a transition from a bearish to a recovery mindset.

Call Option Flows: A New Trend at the Start of the Year

Recent 7-day options trading data confirms this shift:

• Call option buys: account for 30.8% of total trades
• Call option sells: 25.7% (volatility sellers locking in profits at highs)
• Put option activity: 43.5%

The put options account for just over 40%, which, considering recent price gains, is quite moderate—indicating that hedging demand for downside protection is not urgent. This creates a healthy asymmetry: strong upside participation with weak downside hedging.

Market Maker Gamma Risk Map: $95K-$104K Short Gamma Trap

According to options pricing (dealer)'s gamma exposure, they are currently in a short gamma state in the $95K-$104K range. What does this imply?

In a short gamma environment, when prices rise, market makers need to sell spot or perpetual contracts to hedge, which amplifies upward momentum. Conversely, if prices fall, their selling obligations reinforce downward pressure. This is the opposite of the long gamma environment at year-end, when market makers acted as “shock absorbers” limiting volatility.

The behavior of call options at $95K also supports this: the surge in call buying from early January around $87K slowed slightly at $94.4K, but importantly, there was no corresponding large-scale sell-off. This suggests upside participants are patiently holding their positions rather than rushing to cash out. In the short term, this structure supports further upward attempts.

Summary: A New Beginning for the Year

Bitcoin’s story at the start of 2026 is one of structural liberation.

Options liquidation cleared old constraints, orderly futures rebuilding demonstrated a revival of risk appetite, ETF inflows signaled institutional return, and the shift in options from defense to offense marked a turning point in market confidence.

While corporate reserves are still not a driving force, overall, the market is transitioning from passive deleveraging to active repositioning. Although Bitcoin currently faces the short-term holder cost basis test at $99.1K, the clean foundation after clearing, rising participation, and relatively mild downside demand all suggest that the bull market revival is no longer a fantasy but an ongoing evolution.

The beginning of 2026 marks Bitcoin’s transition from a muddy bear market to a new era of precise trading.