By the end of 2024, the cryptocurrency market is experiencing a volatile phase with many significant events occurring. One of the highlights is the expiration of Bitcoin and Ethereum options contracts on the Deribit exchange, which may create significant market volatility. This event will see 146,000 Bitcoin options contracts, valued at nearly $14 billion, expire, accounting for 44% of total open interest for BTC options.
At the same time, Ethereum options worth $3.84 billion will also expire. With approximately $4 billion in BTC options expected to be in the 'money', the market could experience strong volatility as traders may choose to roll over or close their positions. Market sentiment appears increasingly uncertain and optimism is waning, especially regarding ETH.
Meanwhile, the implied volatility of ETH has decreased for call options, indicating that demand for bullish positions is diminishing. Consequently, market sentiment towards the end of the year seems less optimistic compared to early December, particularly for ETH.
Additionally, a cryptocurrency trader has made over $1.1 million from a strategic short position on Ether, using 50x leverage, borrowing and selling Ether at a high price of $3,428 and planning to buy back after the price drops. This position was opened on December 24 and initially faced a loss of over $1.2 million but later became profitable as the price of Ether declined. This trader also earned over $680,000 from funding fees with a liquidation price above $4,750. This story highlights the risks of trading with high leverage, as another trader recently lost over $161,000 in a liquidation event.
While there are significant profits to be made from blockchain investments, the risks, especially from leveraged trading, cannot be overlooked. Successful investments in meme coins or capitalizing on Bitcoin's growth to a record $100,000 have demonstrated enormous potential but also come with substantial risks if not managed carefully. The world of cryptocurrency is a space filled with opportunities and challenges, requiring wisdom and market assessment skills from investors.
