Bitcoin Price Faces Pressure from Whale Covered Call Strategy and Fed Policy Response

Bitcoin Declines Following Fed Rate Cut

Bitcoin has experienced significant downward pressure following the Federal Reserve's decision to cut the US interest rate by 25 basis points on Wednesday evening ^[1]. Since the announcement, Bitcoin fell approximately 3% and is currently trading at $90,200 ^[1].

In contrast to Bitcoin's decline, traditional safe-haven assets rallied. The gold price in US dollars increased by 2%, while silver rose 2.4% following the Fed's decision ^[1].

Decoupling from Stock Market

Bitcoin, which some analysts say is correlated with tech stocks, decoupled from the stock market in the latter half of 2025 ^[2]. While stocks continued to print fresh highs, Bitcoin fell back down to approximately the $90,000 level ^[2].

According to CME Group's FedWatch data tool, only 24.4% of traders expect another interest rate cut at the Federal Open Market Committee (FOMC) meeting in January ^[2].

Whale Covered Call Strategy Suppressing Prices

Market analyst Jeff Park has identified a key mechanism contributing to Bitcoin's price suppression: long-term Bitcoin whales selling covered calls ^[2]. This strategy involves selling call options that give buyers the right, but not the obligation, to purchase an asset in the future at a predetermined price in exchange for the seller collecting a premium ^[2].

Large, long-term BTC holders, also known as "whales" or "OGs," introduce a disproportionate amount of sell-side pressure through this covered call strategy, partly because market makers are on the other side, buying the covered calls ^[2].

Park explained the market dynamics: "When you already have the Bitcoin inventory that you've had for 10-plus years that you sell calls against it, it is only the call selling that is adding fresh delta to the market — and that direction is negative — you are a net seller of delta when you sell calls" ^[2].

Market makers must hedge their exposure to buy the calls by selling spot BTC, forcing market prices down, despite strong demand from traditional exchange-traded fund (ETF) investors ^[2]. Because the BTC used to underwrite the options has been held for a long time and does not represent new demand or fresh liquidity, the calls act as a net downward pressure on prices ^[2].

The analysis concluded that Bitcoin's price is being steered by the options market and that price action will remain choppy as long as whales continue to extract short-term profits from their Bitcoin stash by selling covered calls ^[2].

Critics Seize on Bitcoin's Struggles

US economist and precious metals advocate Peter Schiff has seized on Bitcoin's recent struggles to criticize the cryptocurrency. "Bitcoin was tested and failed," Schiff declared, pointing to the cryptocurrency's unsuccessful recovery attempt ^[1].

Schiff claimed: "The return of the Fed to quantitative easing triggered an exodus from the dollar to gold and silver. There was no exodus to Bitcoin, which was devalued even more than the US dollar" ^[1].

The critic stated his outlook bluntly: "The answer is no. Bitcoin will continue to fall, while gold will continue to rise" ^[1]. He recently warned that Bitcoin whales would enrich themselves at the expense of small investors, claiming the latter only held onto their coins because they were unable to see through the "perfidious game" ^[1].

Future Outlook Uncertain

Several analysts forecast that BTC will resume its price rally when the Federal Reserve continues the rate-cutting cycle and injects liquidity into the financial system, which is a positive price catalyst for risk-on assets ^[2]. However, other analysts project a potential drop to $76,000 and say that Bitcoin's bull run is already over ^[2].