With $14 billion in options hanging high in the market, Bitcoin’s subsequent trend remains a mystery?

Author: BitpushNews

Bitcoin has been on a rollercoaster ride over the past week, from all-time highs to nearly one-month lows.

Just less than a week ago, the price of Bitcoin broke through $108,000, setting a new all-time high, but in the past 24 hours, its price fell below $92,500, hitting its lowest level since November 26.

Bitcoin is down about 13% in the past week, Ethereum and Solana are down 18% and 15% respectively, and XRP is down 12% to $2.18 over the same period. The Meme sector was hit harder, with Dogecoin falling 22% in the past week.

The market is in a critical period of year-end closing. On the one hand, the largest Bitcoin options contract in history is about to expire, which may cause violent fluctuations; on the other hand, the macroeconomic environment, especially the policy direction of the Federal Reserve, has brought additional pressure to the market.

$14 billion worth of options expire

On Friday, $14 billion worth of Bitcoin options open interest (OI) will expire. According to data released by Deribit Exchange CEO Luuk Strijers, the ratio of put options (put) to call options (call) in this expiring contract is 0.69, that is, every 10 call options correspond to 7 put options. This indicates that there is some downside concern in the market. At the same time, the number of contracts expiring this time (146,000) is not small, twice the number of contracts expiring in March 2025 (73,000).

Strijers further explained that this expiring contract accounts for 44% of the current total open interest in all Bitcoin options (totaling $32 billion). Deribit Exchange expects that more than $4 billion of its contracts will expire, which is bound to trigger a large amount of trading activity.

Deribit's Volatility Index (DVOL) has been volatile recently, Strijers noted, meaning traders remain largely divided over the future direction of the market.

Strijers emphasized: "The previously dominant bullish momentum is weakening, and the market is currently in a highly leveraged upward state. If there is a sharp decline, it may trigger a rapid backlash effect. All eyes will be focused on the upcoming options contract expiration. day, as it could set the tone for market trends in 2025."

Cryptocurrency fund inflows drop sharply, ETFs suffer record outflows

While crypto funds maintained net inflows last week, inflows fell sharply as crypto products suffered record single-day outflows following hawkish remarks from Federal Reserve Chairman Jerome Powell. Data from CoinShares shows that investors poured a total of $308 million into funds last week, including Bitcoin ETFs. But on Thursday alone, investors pulled out a record $576 million, with outflows rising to $1 billion on Friday.

Institutional activity may decrease, but market rebound is still possible

David Lawant, head of research at crypto broker FalconX, wrote in a report that volatility in price action remains the most likely scenario ahead of a "bullish trajectory" in the first quarter of 2025, trading with liquidity provider Arbelos Markets Director Sean McNulty believes: "Bulls should maintain Bitcoin prices at $90,000 levels until the end of the year, but a drop below that level may trigger further liquidation."

According to MarketWatch data, the "Christmas market" usually occurs on the last five trading days of each year and the first two trading days after the New Year.

BRN analyst Valentin Fournier said that although trading activity in the cryptocurrency market may be reduced for the rest of the year, this does not mean that investors should give up hope for a "Christmas market." "With an expected decline in institutional activity and retail trading volumes expected to remain subdued in the final two weeks of the year, volatility should continue to decline, although continued negative momentum could lead to modest losses," he wrote in a note on Monday. But there is still potential for a strong market rebound.”