Original Title: Clearing the Decks

Original Authors: Chris Beamish, CryptoVizArt, Antoine Colpaert, Glassnode

Original translation: AididiaoJP, Foresight News

After a major end-of-year adjustment, Bitcoin enters 2026 with a clearer market structure. Current profit-taking pressure has eased, and market risk appetite is gently recovering. However, to establish a sustained upward trend, it remains crucial for Bitcoin to firmly hold and reclaim key cost benchmark levels.

Abstract

After experiencing a deep pullback and months of consolidation, Bitcoin has officially entered 2026. On-chain data shows that profit-taking pressure has significantly eased, and the market structure is showing initial signs of stabilization near the lower end of the range.

Although selling pressure has eased, there is still a large number of previous trapped long positions above the current price, mainly concentrated in the upper half of the current range. These will continue to restrict the upside potential, highlighting the importance of breaking through key resistance levels to resume an upward trend.

Digital currency treasury companies' demand for Bitcoin is still providing a fundamental support for prices, but this demand is characterized by pulses, lacking continuity and structural strength.

The U.S. spot Bitcoin ETF experienced net outflows by the end of 2025, but recently shows signs of net inflows once again. At the same time, open interest in the futures market has stopped declining and started to rise, indicating that institutional investors are re-entering the market, and activity in derivatives is being rebuilt.

Record-sized options positions concentrated their expiration at year-end, with over 45% of open contracts being liquidated. This eliminated structural hedging constraints in the market, allowing true risk preferences to be more clearly reflected in prices.

Implied volatility has likely reached a cyclical bottom. Buyer demand at the beginning of the year is gently pushing up the volatility curve, but it is still at a relatively low level within the range of the past three months.

- As the premium of put options narrows and the proportion of call option trades increases, market skewness continues to return to normal levels. Since the beginning of the year, option trading has clearly tilted toward calls, indicating that investors are shifting from defensive hedging to actively positioning for upward opportunities.

Within the range of $95,000 to $104,000, market maker positions have turned net short, meaning that their hedging activities will passively support the upward price movement as the price rises into this range. Additionally, the premium of call options around the $95,000 strike price indicates that long position holders prefer to hold rather than urgently take profits.

Overall, the market is gradually shifting from a defensive deleveraging phase to selectively increasing risk exposure, entering 2026 with a clearer structure and higher flexibility.

On-chain Insights

In the first week of 2026, Bitcoin broke out of a consolidation range near $87,000 that had lasted for several weeks, rising approximately 8.5% to a high of $94,400. This rally was built on a significant easing of profit-taking pressure in the broader market. By late December 2025, the 7-day average of realized profits had sharply declined from a high of over $1 billion per day for most of the fourth quarter to $183.8 million.

The decline in realized profits, especially the weakening selling pressure from long-term holders, indicates that the main selling pressure that previously restrained price increases has been released in this phase. As the selling force weakens, the market stabilizes and regains confidence, thus driving a new upward trend. Therefore, the breakout at the beginning of the year marks the market's effective digestion of profit-taking pressure, opening up room for further price increases.

With profit-taking pressure easing, the price has been able to rise further. However, the current rebound is entering a supply zone composed of different cost bases. The market is now in a range largely controlled by "recent top buyers," whose cost concentrations lie between $92,100 and $117,400. These investors bought heavily near previous highs and held through the price decline from historical peaks down to around $80,000, and now they are in the current rebound phase.

Therefore, as prices rise back to their cost zone, these investors will have the opportunity to unwind their positions or exit with small profits, forming a natural resistance level. To truly relaunch a bull market, the market will need time and resilience to digest this supply from above and drive prices to effectively break through this area.

When facing the pressure from overhead trapped selling, determining whether the recent rebound can genuinely reverse the previous downward trend and transition into a phase driven by sustained demand requires a reliable price analysis framework. The short-term holder's cost basis model is particularly important during this transitional period.

It is worth noting that the weak equilibrium in the December market last year occurred precisely near the lower boundary of this model, reflecting the fragile market sentiment and lack of buyer confidence at that time. The subsequent rebound pushed prices back up toward the model's mean, which is the 99,100 USD level representing the cost basis of short-term holders.

Therefore, the first key confirmation signal of a market recovery will be prices consistently holding above the cost basis of short-term holders, indicating a resurgence of confidence among new investors and a potential shift toward a positive trend.

As the market focus shifts to whether short-term holders can effectively recover their cost basis, the current market structure appears similar to the failed rebound observed in the first quarter of 2022. If prices continue to fail in rebounding above this level, it could trigger a risk of deeper declines. Should confidence continue to weaken, demand will likely shrink further.

This dynamic is also clearly reflected in the short-term holder MVRV (Market Value Realized Value) indicator. This metric compares the spot price to the average cost of recent buyers, reflecting their profit and loss status. Historically, when this indicator remains below 1 (i.e., the price is below the average cost), the market is often dominated by bears. Currently, the indicator has rebounded from a low of 0.79 to 0.95, indicating that recent buyers are still, on average, facing unrealized losses of about 5%. If it cannot return to a profitable state soon (MVRV > 1), the market will still face downward pressure, making this indicator a key observation point in the coming weeks.

Off-Chain Insights

Corporate treasuries still provide significant marginal demand support for Bitcoin, but their purchasing behavior remains intermittent and event-driven. Treasury entities have repeatedly seen net weekly inflows of thousands of Bitcoins, yet these purchases have not formed a continuous and stable accumulation pattern.

Large inflows of capital often occur during periods of local price pullbacks or consolidation, indicating that corporate buying behavior remains price-driven and opportunistic, rather than representing long-term structural accumulation. Although the range of participating institutions has expanded somewhat, overall capital inflows exhibit a "pulsed" pattern, interspersed with prolonged periods of inactivity.

In the absence of sustained buying support from the capital pool, corporate demand will play a more significant role as a "stabilizer" of prices, rather than a driving force for sustained price increases. Market direction will become more dependent on changes in derivative positions and short-term liquidity conditions.

Recent inflows into U.S. spot bitcoin ETFs have shown early signs of institutional capital re-entering the market. After experiencing continuous net outflows and thin trading toward the end of 2025, the flow of funds has clearly shifted to net inflows in recent weeks, coinciding with the price stabilizing and rebounding from the $80,000 range.

Although the current net inflow volume has not yet recovered to the peak level seen in the mid-cycle, the direction of fund flows has shown a definite turning point. The increase in net inflow days indicates that ETF investors are shifting back from previous net sellers to marginal buyers.

This shift indicates that institutional spot demand is once again becoming a positive support force for the market, rather than a source of liquidity pressure, providing structural buying support for the market's stabilization at the beginning of the year.

After a sharp deleveraging triggered by the price decline at the end of 2025, the total open interest in the futures market has recently started to recover. Following a drop from a cyclical high of over $50 billion, the open interest level has stabilized and is now growing moderately, indicating that derivatives traders are rebuilding their risk positions.

This position rebuilding coincides with the stabilization of prices above $80,000 to $90,000, indicating that traders are gradually increasing their risk exposure rather than aggressively chasing higher prices. Currently, the pace of re-building long positions remains relatively moderate, and the open interest is still significantly lower than previous cycle highs, which reduces the risk of large-scale liquidations in the short term.

A mild rebound in open contracts indicates an improvement in localized risk appetite, with derivative buying gradually returning, which helps initiate a new round of price discovery during the early part of the year as liquidity returns to a more normalized state.

By the end of 2025, the Bitcoin options market experienced the largest position reset in its history. The number of open contracts dropped sharply from 579,258 contracts on December 25 to 316,472 contracts after expiration on December 26, a decline of over 45%.

A high concentration of open positions at certain key strike prices can indirectly affect short-term price movements through hedging operations by market makers. By the end of last year, this concentration of positions reached a high level, leading to "price stickiness" in the market and limiting volatility.

Now, this pattern has been broken. With the concentrated unwinding of expiring positions at year-end, the market has escaped from the structural constraints of the previous hedging mechanisms.

The market environment after expiration provides a clearer window for observing genuine sentiment, as new positions reflect investors' current risk preferences, free from the influence of legacy positions. This makes options trading in the first few weeks of the year a more direct indicator of market expectations for future movements.

After a large-scale reset of options positions, implied volatility hit a short-term low during the Christmas holiday. With light trading during the holidays, one-week implied volatility fell to its lowest level since late September last year.

After that, buyer interest began to return, and investors gradually built long volatility positions (especially bullish ones) around the New Year, pushing the volatility curve across all time horizons to rise moderately.

Although there has been some recovery, implied volatility remains compressed. Volatility across all maturities, from one week to six months, is clustered between 42.6% and 45.4%, with a relatively flat curve shape.

Volatility remains at the lower end of the three-month range, and the recent rebound reflects a warming of market participation rather than a comprehensive repricing of risk.

With implied volatility stabilizing, skew provides a clearer view of directional preferences among traders. Over the past month, the premium of put options relative to call options has continuously narrowed across all tenors, and the 25-Delta skew curve has gradually returned toward the zero axis.

This reflects that the market is gradually shifting toward a bullish positioning. Investors' demand is moving from merely hedging against declines to increasing exposure to upward opportunities, which is consistent with their behavior of reallocating positions after year-end portfolio adjustments.

Meanwhile, defensive positions have decreased. Some downside protection positions have been unwound, reducing the premium paid for "black swan" insurance.

Overall, the skewness indicates that market risk expression is becoming more balanced, with investors showing somewhat increased expectations for price increases or volatility expansion.

The cash flow data corroborates the trend reflected by the skew. Since the beginning of the year, options market activity has shifted from systematically selling call options (betting on volatility decline) to actively buying call options (betting on an upward move or increased volatility).

Over the past seven days, call option buying transactions accounted for 30.8% of total options activity. The rise in call demand has also attracted volatility sellers, who participate by selling call options (accounting for 25.7% of total activity) to capture higher premium income.

Bearish directional trades accounted for 43.5% of total trading volume, a relatively moderate level against the backdrop of recent price increases. This is consistent with the skew moving toward balance, reflecting a reduced demand in the market for immediate downside protection.

With increased bullish options trading since the beginning of the year, market makers have also adjusted their positions accordingly. Currently, within the range of $95,000 to $104,000, market makers overall hold a net short position.

Within this range, when prices rise, market makers need to buy spot assets or perpetual contracts to hedge risks. This passive operation creates a reinforcing effect that amplifies upward movements in a stronger market, which is sharply different from the stabilizing positive environment that suppressed volatility at the end of last year.

The traders' concentrated purchase of call options in the $95,000 to $100,000 range for expiring contracts in the first quarter further confirms the shift in how market risk is being expressed. The current position structure of market makers implies that their hedging activities no longer suppress price volatility within this range, and may even amplify upward momentum.

The premium performance of call options with a strike price of $95,000 can serve as an effective indicator for observing changes in market sentiment. On January 1st, when the spot price was around $87,000, the buying of premiums for call options at this strike price began to accelerate, and continued to increase as the price climbed toward its recent high of $94,400.

Subsequently, although the premium buying showed a tendency to stabilize, it did not experience a significant decline. More importantly, this process was not accompanied by a substantial increase in the selling of call option premiums.

This indicates limited profit-taking behavior. Since the recent high, the volume of sold call options has only moderately increased, suggesting that most holders of long positions prefer to hold onto their positions rather than rush to lock in profits.

Overall, the option premium behavior around the $95,000 strike price reflects the patience and confidence of bullish participants in maintaining their positions.

Summary

Bitcoin has significantly cleared historical positions in the spot, futures, and options markets as it enters the new year. The deleveraging at the end of 2025, combined with year-end options expirations, effectively removed the structural constraints previously facing the market, leaving behind a cleaner and more signal-transparent environment.

Currently, early signs of market re-engagement are emerging: ETF inflows are stabilizing and rebounding, activity in the futures market is rebuilding, and the options market has clearly shifted toward a bullish positioning—skewness returning to normal, volatility hitting a bottom, and market makers turning negative in key upper ranges.

These dynamics collectively indicate that the market is gradually shifting from a phase dominated by defensive selling to one characterized by selective risk-taking and rebuilding participation. Although structural buying power still needs to strengthen, the release of historical position pressures and the reaccumulation of bullish sentiment suggest that Bitcoin has entered 2026 with a lighter step. The improvement in the market's internal structure provides more possibilities for further price expansion in the future.

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