Bitcoin climbed roughly 2.6% during thin holiday trading, but QCP Capital warns the move lacks the conviction needed for a sustained breakout, with sharply reduced open interest signaling capital remains sidelined ahead of year-end.
The Singapore-based trading firm said the rally appears driven by spot and perpetual buying rather than forced liquidations, with less than $40 million in long liquidations recorded during the move, potentially supported by renewed corporate demand as Strategy’s Michael Saylor hinted at additional purchases overnight.
Gamma Risk Builds Above $94K as Dealers Flip Short
Post-expiry positioning has shifted meaningfully following Friday’s record options expiry.
BTC perpetual funding on Deribit surged from near-flat levels to above 30%, signaling dealers who were previously long gamma ahead of expiry are now positioned short gamma to the upside.
“As prices rise, these participants are required to buy spot BTC or near-dated Call options to hedge, creating a feedback loop,” QCP said in its note.
The firm observed this dynamic when Bitcoin briefly breached $90,000, triggering aggressive buying in perpetuals and the BTC-2JAN26-94K call.
QCP emphasized that a sustained move above $94,000 could amplify this gamma-driven squeeze in the coming sessions.
However, downside hedging has eased after the large December 85K put was not rolled, pointing to reduced near-term demand for protection despite ongoing spot ETF outflows and persistent selling pressure during US hours.
The 86K level has remained resilient throughout recent weakness, providing technical support even as institutional outflows continued.
Leverage Builds Despite Fear as $2.4B Added in December
While QCP highlights weak conviction, CryptoQuant analyst data reveals that traders added $2.4 billion in leverage throughout December despite a 40% collapse in activity.
Combined Bitcoin and Ethereum futures rose from $35 billion to $38 billion, marking a 7% expansion in leverage amid markets’ expectations of capitulation.
“Bitcoin open interest increased one billion from twenty-two to twenty-three billion. Ethereum added one point four billion climbing from thirteen to fifteen billion,” the analyst wrote.
Source: CryptoQuant
This happened while Bitcoin’s price stayed near $88,000 and the Fear Index registered 27, suggesting stubborn optimism persists rather than the despair typically required for a final washout.
The last seven days alone added $450 million in new leverage, with Bitcoin positions growing 2% weekly as traders opened new positions betting on recovery rather than exiting during weakness.
According to the analyst, Binance, Bybit, OKX, and Gate.io all showed steady accumulation, maintaining or growing positions rather than clearing risk during December’s decline.
The analyst warned that this contradicts typical capitulation signals.
“True bottoms form when leverage clears, not builds,” the analyst noted, highlighting that funding stayed positive as traders paid for longs even as whales withdrew 20,000 Bitcoin and professional money exited while retail leveraged up.
Capital Sidelined as Markets Trade Without Direction
QCP cautioned it may be premature to draw firm conclusions from options positioning alone, noting that open interest dropped roughly 50% following Friday’s expiry.
“This capital may ultimately be reallocated into other asset classes or redeployed across options, spot, or perpetuals, a process that could reintroduce volatility once positioning rebuilds,” the firm said.
The current environment shows Bitcoin holding resilient above $86,000 despite headwinds, while long-term holders recorded just 2,700 BTC in daily sell volume two days ago, the lowest so far in 2025.
Meanwhile, Bitcoin has delivered a 27,701% gain since January 2015, vastly outperforming gold’s 283% and silver’s 405% appreciation during the same period, according to analyst Adam Livingston.
Notably, Coinbase CEO Brian Armstrong recently said Bitcoin plays a constructive role by applying pressure on US policymakers to maintain fiscal discipline.
“Bitcoin provides a check and balance on the dollar,” he told the Tetragrammaton podcast, warning that persistent inflation without growth could cost the dollar its status as a reserve currency.
His comments come as the US national debt climbs to roughly $37.65 trillion, increasing by more than $70,000 per second, according to the US Congress Joint Economic Committee.
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