On Tuesday (December 24), Bitcoin fell back to around $94,200 to take a breather. Bullish signals from the "Trump Trade" were frequent, but traders remained cautious. Singapore's crypto investment agency QCP Capital warned that nearly $20 billion in notional value of Bitcoin and Ethereum options will expire on Friday, the largest in history.
QCP pointed out that after a wash last week, the spot price of Bitcoin continued to fluctuate sideways as the holiday approaches. Although the market seems calm on the surface this week, all eyes are on the upcoming large-scale options expiration event on Friday. At that time, nearly $20 billion in notional value of Bitcoin and Ethereum options will expire.
It should be noted that this figure accounts for nearly 50% of the total options holdings on the Deribit exchange.
Following the options expiration, there is a good chance we will see a repeat of the typical end-of-quarter volatility sell-off, especially if Bitcoin spot price continues to trade in this range and option sellers continue to roll their short positions.
Unlike option sellers who must wait for their options to expire before releasing their collateral, call buyers may have already rolled over most of their positions in advance.
However, if Bitcoin manages to break above the $100,000 mark, volatility is likely to remain stable.
Meanwhile, as Bitcoin continues to languish below $100,000, traders may also see altcoins begin to catch up again.
A similar trend was observed a month ago when the ETH/BTC ratio bounced off the 0.032 support level when Bitcoin was trading at these levels.
Currently, Bitcoin’s market share remains at 58%, and the market is closely watching whether this ratio will drop significantly to confirm whether funds are flowing from Bitcoin to altcoins.
According to data released by Luuk Strijers, CEO of Deribit exchange, $14 billion worth of open interest in Bitcoin options will expire on Friday.
He pointed out that the ratio of put options to call options for this expiration contract is 0.69, that is, for every 10 call options, there are 7 put options. This shows that there is a certain fear of falling in the market.
At the same time, the number of contracts expiring this time (146,000) is not small, which is twice the number of contracts expiring in March 2025 (73,000).
Strijers further explained that the current expiration accounts for 44% of the total open interest of all Bitcoin options contracts, totaling $32 billion.
Deribit exchange expects more than $4 billion worth of contracts to expire, which is bound to trigger a large amount of trading activity.
Deribit’s volatility index (DVOL) has fluctuated wildly recently, and Strijers pointed out that this means that traders still have large differences in their views on the future direction of the market.
Strijers stressed: "The previously dominant bullish momentum is fading and the market is currently in a highly leveraged uptrend. If there is a sharp decline, it may trigger a rapid backlash. All eyes will be on the upcoming option contract expiration date, as it may set the tone for the market trend in 2025."
Bitcoin Technical Analysis
Bitcoin price confirmed a breakout above the $95,195 level and the daily candlestick closed below it, reinforcing expectations of a bearish correction to continue dominating over the coming sessions with targets at $90,750 and subsequently at $87,055.
The bearish wave suggested by the intraday bearish channel organization, which is well supported by EMA 50, noting a move above $95,195 and then $96,555 will halt the negative scenario and guide the price to once again attempt to resume the primary bullish trend.
“The expected trading range for Tuesday is between $91,000 support and $96,000 resistance.”
“Trend forecast is BEARISH.”
