Written by: BitpushNews
From historical highs to recent monthly lows, bitcoin has experienced a rollercoaster ride over the past week.
Just under a week ago, the price of bitcoin broke through $108,000, reaching an all-time high, while in the past 24 hours, its price once dropped below $92,500, marking the lowest level since November 26.
Over the past week, bitcoin's decline was about 13%, while Ethereum and Solana fell 18% and 15% respectively, and XRP dropped 12% to $2.18. The meme segment was hit hard, with Dogecoin dropping 22% in the past week.
The market is at a critical point as the year comes to a close. On one hand, the largest bitcoin options contracts in history are about to expire, which could trigger significant volatility; on the other hand, the macroeconomic environment, especially the direction of the Federal Reserve's policy, 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 exchange CEO Luuk Strijers, the ratio of put options to call options for these expiring contracts is 0.69, meaning there are 7 put options for every 10 call options. This indicates some downward concern in the market. At the same time, the number of expiring contracts (146,000) is also considerable, being double that of the contracts expiring in March 2025 (73,000).
Strijers further explained that the expiring contracts account for 44% of all outstanding bitcoin options contracts (with a total value of $32 billion). Deribit exchange expects that over $4 billion of contracts will expire and be executed, which will inevitably trigger a large amount of trading activity.
Deribit's volatility index (DVOL) has fluctuated sharply, with Strijers noting that this indicates significant disagreement among traders about 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. All eyes will be on the upcoming options contract expiration date, as it could set the tone for the market in 2025.'
Cryptocurrency fund inflows have sharply decreased, and ETFs faced record outflows.
Although cryptocurrency funds still maintained a net inflow last week, after Federal Reserve Chair Powell's hawkish speech, cryptocurrency products faced record single-day outflows, leading to a significant drop in inflow. CoinShares data 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, and outflows rose to $1 billion on Friday.
Institutional activity may decrease, but there is still a possibility of market rebound.
David Lawant, head of research at crypto broker FalconX, wrote in a report that before a 'bullish trajectory' emerges in the first quarter of 2025, price fluctuations in the short term are still the most likely scenario. Sean McNulty, trading director at liquidity provider Arbelos Markets, believes: 'Bulls should keep bitcoin's price at the $90,000 level by the end of the year, but if it falls below this level, it could trigger further liquidations.'
According to MarketWatch data, typically, the 'Christmas rally' occurs during the last five trading days of each 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 that 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 volume is anticipated to remain low in the final two weeks of the year, volatility should continue to decrease. Although sustained negative momentum may lead to slight losses, the market still has the potential for a strong rebound.'
