Author: BitpushNews
From its historical high to its recent monthly low, Bitcoin has experienced a rollercoaster ride over the past week.
Just less than a week ago, Bitcoin's price broke through $108,000, setting a new historical high, but within the last 24 hours, its price briefly dropped below $92,500, marking the lowest level since November 26.
Over the past week, Bitcoin has fallen by about 13%, while Ethereum and Solana dropped by 18% and 15% respectively, and XRP fell by 12% to $2.18 during the same period. The meme sector has been significantly impacted, with Dogecoin falling 22% in the past week.
The market is at a critical juncture as the year comes to a close. On one hand, the largest Bitcoin options contract in history is about to expire, which may trigger severe fluctuations; on the other hand, the macroeconomic environment, especially the Federal Reserve's policy direction, is putting additional pressure on the market.
$14 billion worth of options are set to expire.
This Friday, $14 billion worth of Bitcoin options open interest (OI) will expire. According to data released by Deribit CEO Luuk Strijers, the ratio of put options to call options for this expiration is 0.69, meaning that for every 10 call options, there are 7 put options. This indicates a certain level of downward concern in the market. At the same time, the number of contracts expiring (146,000) is also considerable, double that of the contracts expiring in March 2025 (73,000).
Strijers further explained that the expiring contracts account for 44% of all current Bitcoin options open interest (totaling $32 billion). Deribit expects that over $4 billion worth of contracts will expire and be executed, which is sure to trigger significant trading activity.
Deribit's volatility index (DVOL) has recently fluctuated sharply, and Strijers pointed out that this indicates significant divergence among traders regarding the future direction of the market.
Strijers emphasized: 'The previously dominant bullish momentum is weakening, and the market is currently in a high-leverage upward state. If a significant drop occurs, it could trigger a rapid backlash. Everyone's attention will be focused on the upcoming options expiration date, as it could set the tone for market movements in 2025.'
Cryptocurrency fund inflows have dropped significantly, with ETFs experiencing record outflows.
Although cryptocurrency funds remained in a net inflow state last week, following Federal Reserve Chair Powell's hawkish remarks, cryptocurrency products faced record single-day outflows, leading to a significant decrease in inflow amounts. According to CoinShares data, investors injected a total of $308 million into funds last week, including Bitcoin ETFs. However, on Thursday alone, investors withdrew a record $576 million, and the outflow amount rose to $1 billion on Friday.
Institutional activity may decrease, but there is still potential for a market rebound.
David Lawant, head of research at crypto broker FalconX, wrote in a report that before a 'bullish trajectory' appears in the first quarter of 2025, volatile price movements are still the most likely scenario in the short term. Liquidity provider Arbelos Markets trading head Sean McNulty believes: 'Bulls should keep Bitcoin's price at the $90,000 level by the end of the year, but if it falls below that level, it could trigger further liquidations.'
According to MarketWatch data, typically, the 'Christmas rally' occurs during the last five trading days of the year and the first two trading days of the new year.
BRN analyst Valentin Fournier stated that while trading activity in the cryptocurrency market may decrease in the remaining time this year, it does not mean investors should give up hope for a 'Christmas rally.' In a report on Monday, he wrote: 'As institutional activity is expected to decline, and retail trading volumes are projected to remain low in the final two weeks of the year, volatility should continue to decrease. Although ongoing negative momentum may lead to slight losses, the market still has the potential for a strong rebound.'
