As the year comes to a close, the financial market is stepping into a crucial concluding phase. Bitcoin, this attention-grabbing digital asset, has seemed to ride a roller coaster over the past week, plummeting from historic peaks, leaving investors' emotions in a state of fluctuation.
Just recently, Bitcoin's price soared like a rocket, breaking through the 108,000 dollar mark and creating an unprecedented historical high. However, unexpectedly, in the following 24 hours, its price plummeted like a cliff, dropping below 92,500 dollars, the lowest point since November 26. This wave of intense volatility caught market participants off guard, prompting them to reevaluate Bitcoin's trend and future investment value.
Looking back over the past week, Bitcoin's decline reached an astonishing 13%. Meanwhile, other mainstream digital currencies were not spared either. Ethereum and Solana dropped by 18% and 15% respectively, while XRP fell by 12%, with the price dropping to 2.18 dollars. In the Meme sector, Dogecoin suffered a severe blow, falling by 22% within a week.
At this sensitive and critical moment, the market is facing the intertwined influence of multiple factors. On one hand, the largest-scale Bitcoin options contracts in history are approaching their expiration date, which will undoubtedly bring significant uncertainty to the market. According to the latest data, options contracts worth 14 billion dollars will expire this Friday. Luuk Strijers, CEO of Deribit exchange, revealed that among these expiring contracts, the ratio of put options to call options is about 0.69, meaning that for every 10 call options, there are 7 put options. This data reflects a certain level of pessimism in the market, with investors holding cautious attitudes towards future trends.
In addition, the number of contracts expiring this time is also quite substantial, reaching 146,000, which is twice the number of contracts expiring in March 2025. Strijers further pointed out that these expiring contracts account for 44% of all current open contracts for Bitcoin options, with a total value reaching 32 billion dollars. It is expected that over 4 billion dollars worth of contracts will expire and be executed, which will trigger a large amount of trading activity and market volatility.
Deribit's volatility index (DVOL) has also shown extreme fluctuations recently, further exacerbating market uncertainty. Strijers emphasized that the previously dominant bullish momentum is gradually weakening, and the market is currently in a high-leverage state. A significant drop could quickly trigger a backlash effect, causing a tremendous impact on the entire market.
Meanwhile, the macroeconomic environment, especially the Federal Reserve's policy direction, has also added extra pressure to the market. After Federal Reserve Chairman Powell delivered a hawkish speech, cryptocurrency products experienced record single-day outflows. According to CoinShares data, although cryptocurrency funds maintained a net inflow last week, investors quickly withdrew funds after Powell's speech, leading to a significant drop in inflow. On Thursday alone, investors withdrew a record 576 million dollars, and outflows on Friday soared to 1 billion dollars.
However, in such a turbulent market environment, some analysts still hold an optimistic view of the market. David Lawant, research director at cryptocurrency broker FalconX, pointed out in a report that although price volatility is still the most likely scenario in the short term, the market may still welcome a turnaround before a 'bullish trajectory' appears in the first quarter of 2025. He advises investors to remain patient and keep a close eye on market dynamics.
Sean McNulty, trading director at liquidity provider Arbelos Markets, expressed a similar viewpoint. He believes that bulls should maintain Bitcoin's price at the 90,000 dollar level by the end of the year, but if it falls below this level, it could trigger further liquidation and market panic. However, he also pointed out that seeking investment opportunities amid market fluctuations is one of the essential skills for investors.
It is worth mentioning that according to MarketWatch's data statistics, the 'Christmas rally' usually occurs during the last five trading days of the year and the first two trading days of the new year. Will this traditional pattern reappear in this year's cryptocurrency market? This has become one of the focal points for investors.
BRN analyst Valentin Fournier stated that although trading activity in the cryptocurrency market might decrease for the remainder of the year, this does not mean that investors should give up hope and expectations for the market. He believes that as institutional activity is expected to decline and retail trading volume remains sluggish, market volatility may continue to decrease. However, this does not mean that the market will stagnate; on the contrary, after a sustained negative momentum, a strong rebound is still possible.
In this moment full of variables, investors need to remain calm and rational, closely monitoring market dynamics and policy directions. Only in this way can they stabilize their position and seize opportunities in the turbulent financial markets.
