Bitcoin Price Falls to $87,000 – Market Shows Extreme Fear Before Year-End

Significant Price Losses in the Crypto Market

The Bitcoin price has declined significantly in recent days, temporarily correcting to $87,100, representing a decrease of 1.8 percent compared to the previous day ^[2]. Ether also failed to hold its position and fell to $2,945 ^[2].

Sentiment in the crypto market remains extremely pessimistic. The Fear & Greed Index, which measures market sentiment, currently stands at just 24 points, signaling "extreme fear" among investors ^[2].

Monetary Policy Uncertainties Weigh on Market

The market weakness is characterized by monetary policy and regulatory uncertainties ^[2]. The U.S. Federal Reserve is likely to refrain from further interest rate moves in January, while the Japanese central bank recently raised its key interest rate to 0.75 percent ^[2].

Today at 2:30 PM (CEST), initial estimates for U.S. gross domestic product for the third trading quarter of 2025 will be released with a two-month delay ^[2]. Should the preliminary data for the third quarter miss the conservative forecast of 3.2 percent, investors could interpret this bearishly in an initial reaction ^[2].

Rising Funding Rates Signal Optimism

Despite current price losses, some technical indicators appear bullish. Rising funding rates typically mean that the perpetual price is above the spot price and more traders are optimistic, as they are willing to pay premiums to hold long positions ^[3].

However, this can also indicate market overheating, as extremely high rates may point to excessively leveraged long positions and a possible correction risk ^[3].

Historic Options Expiration Event Approaching

Market volatility could be further amplified by a massive Bitcoin options expiration event at year-end on Friday, December 26 ^[3]. More than $23 billion in Bitcoin options contracts by notional value will expire in one of the largest options expiration events of all time ^[3]. Quarter-end and year-end options expiration events are significantly larger than regular weekly or monthly events ^[3].

Divided Expert Opinions

The reasons for the decline are varied. Some experts see the cause in the current economic situation, others in the regulation of the crypto market ^[2]. It remains to be seen how the crypto market will develop in the coming days and weeks. Some experts are optimistic, while others anticipate further declines ^[2].