Author: BitpushNews
From a historical high to a recent monthly low, Bitcoin experienced a rollercoaster ride over the past week.
Just less than a week ago, Bitcoin's price broke through $108,000, setting a new all-time high, but within the past 24 hours, its price briefly fell below $92,500, marking the lowest level since November 26.
Over the past week, Bitcoin has dropped about 13%, while Ethereum and Solana fell 18% and 15%, respectively, with XRP dropping 12% to $2.18 during the same period. The meme sector has been hit hard, with Dogecoin dropping 22% over the past week.
The market is at a critical juncture as the largest Bitcoin options contracts in history are set to expire, potentially triggering significant volatility. On the other hand, the macroeconomic environment, especially the direction of the Federal Reserve's policies, has added extra pressure to the market.
Options worth $14 billion 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 there are 7 put options for every 10 call options. This indicates a certain level of bearish sentiment in the market. Additionally, the number of contracts expiring (146,000 contracts) is substantial, being double the number of contracts expiring in March 2025 (73,000 contracts).
Strijers further explained that the expiring contracts account for 44% of the total outstanding Bitcoin options contracts (totaling $32 billion). Deribit expects that over $4 billion of these contracts will be exercised, which will undoubtedly trigger a large amount of trading activity.
Deribit's volatility index (DVOL) has fluctuated sharply recently, and Strijers noted that this indicates a 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. A significant drop could trigger a rapid backlash. All eyes will be on the upcoming options contract expiration date, as it may set the tone for market trends in 2025.'
Cryptocurrency fund inflows have dropped significantly, with ETFs experiencing record outflows.
Despite a net inflow of cryptocurrency funds last week, after Federal Reserve Chair Powell's hawkish remarks, cryptocurrency products faced record single-day outflows, leading to a significant drop in inflows. Data from CoinShares shows that investors injected a total of $308 million into funds last week, including Bitcoin ETFs. However, on Thursday alone, investors withdrew a record $576 million, with outflows rising to $1 billion on Friday.
Institutional activity may decrease, but there is still potential for a rebound in the market.
David Lawant, head of research at crypto brokerage FalconX, wrote in a report that before a 'bullish trajectory' emerges in the first quarter of 2025, price fluctuations in the short term are the most likely scenario. Liquidity provider Arbelos Markets' trading director Sean McNulty believes: 'Bulls should maintain Bitcoin's price at around $90,000 by the end of the year, but if it falls below this level, it could trigger further liquidations.'
According to MarketWatch data, the 'Christmas rally' typically 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 although trading activity in the cryptocurrency market may decrease in the remaining time this year, it does not mean investors should give up hope for the 'Christmas rally.' In a report on Monday, he wrote: 'As institutional activity is expected to decline and retail trading volume is anticipated to remain low in the last two weeks of the year, volatility should continue to decrease. Although ongoing negative momentum may lead to slight losses, there is still the potential for a strong rebound in the market.'
