Author: BitpushNews
From its all-time high to its lowest point in nearly a month, Bitcoin has experienced a roller coaster ride over the past week.
Less than a week ago, Bitcoin hit a new all-time high above $108,000, but in the past 24 hours, its price fell below $92,500, the lowest level since November 26.
Bitcoin has fallen by about 13% in the past week, Ethereum and Solana have fallen by 18% and 15% respectively, and XRP has fallen by 12% to $2.18 in the same period. The Meme sector has been hit hard, with Dogecoin falling by 22% in the past week.
The market is at a critical juncture as the year comes to a close. On one hand, the largest Bitcoin options contracts in history are about to expire, potentially triggering significant volatility; on the other hand, the macroeconomic environment, particularly the Federal Reserve's policy direction, is adding 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 downward concern in the market. At the same time, the number of contracts expiring (146,000) is significant, being double the number of contracts expiring in March 2025 (73,000).
Strijers further explained that the expiring contracts account for 44% of the total open interest in Bitcoin options (totaling $32 billion). Deribit expects that over $4 billion of these contracts will expire in execution, which is bound to trigger a large amount of trading activity.
Deribit's volatility index (DVOL) has recently fluctuated sharply. Strijers points out that this indicates significant divergence among traders regarding the market's future direction.
Strijers emphasizes: "The previously dominant bullish momentum is weakening, and the market is currently in a high-leverage upward state. If a significant drop occurs, it may trigger a rapid backlash. Everyone's attention will be focused on the upcoming options contract expiration date, as it could set the tone for market trends in 2025."
Cryptocurrency fund inflows have significantly decreased, with ETFs experiencing record outflows
Despite net inflows remaining positive for cryptocurrency funds last week, record single-day outflows from cryptocurrency products occurred following hawkish comments from Federal Reserve Chair Powell, leading to a significant decrease in inflow volume. 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, and the outflow increased to $1 billion on Friday.
Institutional activity may decrease, but the market still has rebound potential
David Lawant, research director at cryptocurrency broker FalconX, wrote in a report that before a 'bullish trajectory' appears in the first quarter of 2025, price volatility in the short term remains the most likely scenario. Sean McNulty, trading director at liquidity provider Arbelos Markets, believes: "Bulls should aim to keep Bitcoin's price at $90,000 by the end of the year, but if it falls below that 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 for the remainder of the year, that does not mean investors should abandon hope for a 'Christmas rally.' In a report on Monday, he wrote: 'With expectations of institutional activity declining and retail trading volume expected to remain low in the last two weeks of the year, volatility should continue to decrease. Although persistent negative momentum may lead to slight losses, the market still has the potential for a strong rebound.'
