Bitcoin (BTC) can't seem to find its footing. The cryptocurrency briefly rallied to $89,430 before getting slammed back down, and now it's stuck in a violent $85,000 to $90,000 range that's shredding leveraged traders on both sides.

According to Bloomberg, volatility is spiking ahead of a massive $23 billion options expiry next week. That represents more than half of Deribit's total open interest, and it's setting up conditions for sharp, liquidity-driven price swings that have little to do with fundamental value.

The options market tells a bearish story. Thirty-day implied volatility sits near 45%, skew has turned negative, and traders are pricing in downside risk extending into early 2026. About $1.4 billion in put open interest is clustered around $85,000, which could pull prices toward that level as expiry approaches. Meanwhile, calls at $100,000 to $120,000 suggest only tepid hopes for a meaningful recovery rally.

Recent sessions have been absolutely brutal. Over $130 billion in value changed hands within a single hour during one particularly chaotic stretch. The Kobeissi Letter noted that a $3,000 rally evaporated in under an hour, triggering $120 million in short liquidations before reversing sharply and wiping out another $200 million in long positions. That's a $140 billion market-cap swing in less than two hours.

Bloomberg flagged two additional headwinds: hedging activity ahead of a January 15 MSCI index decision that could pressure crypto-heavy treasury firms, and renewed call overwriting strategies that may cap any upside momentum.

Bitcoin is now on pace for its worst quarter since Q2 2022, sitting roughly 30% below its October peak near $126,000. Right now, leverage and liquidity hunts are running the show, not fundamentals.