Buoyed by lower-than-expected inflation data, the S&P 500 snapped a four-day losing streak. Meanwhile, Bitcoin (BTC) slid from $89,000 last night, hitting a low of $84,450. Options data indicates that Bitcoin will face significant pressure in the final weeks of 2025; approximately $23 billion in contracts are set to expire next Friday, potentially exacerbating already elevated volatility.

Inflation Data Comes in Lower Than Expected; Micron Leads Tech Rally

The November Consumer Price Index (CPI) report showed a headline annual inflation rate of 2.7%, coming in below the expected 3.1%. Core CPI, which excludes volatile food and energy prices, stood at 2.6%, also lower than the forecast of 3%. Due to the longest government shutdown in history, the Bureau of Labor Statistics (BLS) cancelled the release of the October inflation report, meaning the current reading does not contain all the standard data points of a regular CPI report.

Despite these limitations, the report offered a glimmer of hope, suggesting that inflationary pressures are easing after fluctuating within a narrow range since the beginning of the year. The BLS noted that in the two months ending in November, Core CPI rose only 0.2%, largely due to price declines in hotel lodging, recreation, and apparel. Conversely, prices for household furnishings and personal care products saw increases.

A robust earnings report from tech giant Micron Technology (MU) highlighted strong market demand for AI-related products, sending Micron shares soaring 10%. The S&P 500 rose nearly 1%, ending its previous four-day slide.

Bitcoin Fluctuates; Options Market Faces High Volatility Ahead of Dec 26

Bitcoin fell from $89,000 last night, touching a low of $84,450, while Ethereum also briefly dipped below $2,800. Within 24 hours, $550 million in positions were liquidated. The total crypto market cap declined by 0.91% to $2.88 trillion. The Fear & Greed Index continues to hover in the "Extreme Fear" zone at 22, while the Altcoin Season Index has retreated to a low range of 16.

Assets under management (AUM) for U.S. Bitcoin ETFs dropped from $119.4 billion last month to $112.6 billion, and Ethereum ETFs also shrank by $1.8 billion, reflecting investor caution at year-end. Reduced ETF inflows have weakened a key pillar of liquidity.

Options data indicates that Bitcoin will face immense pressure in the final weeks of 2025. Approximately $23 billion in contracts are set to expire next Friday, which could worsen already high volatility. Rising contract volumes suggest traders are pricing in continued downside risk, making the current market increasingly precarious.

Position distribution around the December 26 expiry reflects this divergence. Call options are concentrated around strike prices of $100,000 to $120,000, implying the market retains some optimism for a year-end rally. However, bears dominate the short term, with a massive accumulation of put options near the $85,000 strike price. STS Digital estimates open interest at this level to be around $1.4 billion, noting that it could act as a magnet, pulling the price closer to this level before expiry.

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