Author: BitpushNews
From a historical high to a near-month low, Bitcoin has experienced a rollercoaster ride in the past week.
Just under a week ago, Bitcoin's price broke through $108,000, setting a new all-time high, but in the past 24 hours, its price fell below $92,500, marking the lowest level since November 26.
Bitcoin fell about 13% over the past week, while Ethereum and Solana dropped 18% and 15% respectively, and XRP fell 12% to $2.18 during the same period. The meme sector was hit hard, with Dogecoin dropping 22% over the past week.
The market is at a critical juncture as the year-end approaches. 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, especially the direction of the Federal Reserve's policies, is adding extra pressure to the market.
Options worth $14 billion are expiring
This Friday, options worth $14 billion in Bitcoin 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. Additionally, the number of contracts expiring (146,000) is also substantial, double that of the contracts expiring in March 2025 (73,000).
Strijers further explained that these 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 upon expiration, which will undoubtedly trigger a large volume of trading activity.
Deribit's volatility index (DVOL) has recently fluctuated sharply, with Strijers noting that this indicates significant disagreement among traders regarding the market's future direction.
Strijers emphasized: "The previously dominant bullish momentum is waning, and the market is currently in a state of high leverage upward. 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 market trends in 2025."
Cryptocurrency fund inflows have plummeted, with ETFs facing record outflows
Despite cryptocurrency funds remaining net inflow last week, they faced record single-day outflows after Fed Chair Powell's hawkish remarks, leading to a significant decline in inflows. According to CoinShares, 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 the market still holds the potential for a rebound
David Lawant, head of research at crypto broker FalconX, wrote in a report that before a 'bullish trajectory' appears in the first quarter of 2025, price fluctuations are still the most likely short-term scenario. Sean McNulty, head of trading at liquidity provider Arbelos Markets, believes: 'Bulls should maintain Bitcoin's price at $90,000 by the end of the year, but if it falls below this level, further liquidations may occur.'
According to MarketWatch data, typically, the 'Christmas rally' 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 while trading activity in the cryptocurrency market may decline 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 expectations for institutional activity decline, and retail trading volumes are expected to remain subdued in the last two weeks of the year, volatility should continue to decrease. Although persistent negative momentum may lead to slight losses, there remains potential for a strong rebound in the market.'
