Bitcoin Whipsaws From $89,000 To $85,000, Liquidates $120M: What's Driving Volatility?

Bitcoin (CRYPTO: BTC) remains trapped in a volatile $85,000 to $90,000 range, struggling to sustain upside even after softer-than-expected inflation data.

What Happened: Bitcoin's volatility is spiking ahead of a massive $23 billion options expiry next week, Bloomberg reported on Thursday.

BTC briefly surged to $89,430 before reversing sharply and now sits roughly 30% below its October peak near $126,000.

Options markets are leaning bearish.

Thirty-day implied volatility is near 45%, skew is negative, and traders are pricing downside risk into early 2026.

Heavy put open interest around $85,000 (about $1.4 billion) could act as a magnet into expiry, while calls at $100,000–$120,000 signal only modest hopes for a relief rally.

These contracts represent more than half of Deribit's total open interest, amplifying the risk of sharp, liquidity-driven moves.

Recent sessions have already seen violent swings, with over $130 billion in value changing hands within an hour.

Also Read: Bitcoin, Ethereum, Solana To Hit All-Time Highs In 2026, Bitwise Predicts

Why It Matters: Bloomberg flagged two additional overhangs: hedging ahead of a Jan. 15 MSCI index decision that could pressure crypto-heavy treasury firms, and renewed call overwriting that may cap upside.

Bitcoin is on pace for its worst quarter since Q2 2022.

As The Kobeissi Letter noted, a $3,000 rally was erased within an hour, triggering $120 million in short liquidations, followed by $200 million in long liquidations on the reversal.

That's a $140 billion market-cap swing in under two hours.

For now, leverage and liquidity hunts, not fundamentals, are driving Bitcoin's violent price action.

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