Written by: BitpushNews
From historical highs to near a month’s lows, Bitcoin experienced a rollercoaster ride in the past week.
Just less than a week ago, Bitcoin's price broke through $108,000, setting a historical high, but in the past 24 hours, its price temporarily fell below $92,500, marking the lowest level since November 26.
In the past week, Bitcoin's decline was about 13%, 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 falling 22% in the past week.
The market is at a key moment at the end of the year. On one hand, the largest Bitcoin options contracts in history are about to expire, which may 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.
$14 billion worth of options 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 this expiration is 0.69, meaning there are 7 put options for every 10 call options. This indicates that there is a certain level of downside concern in the market. Meanwhile, the number of contracts expiring (146,000) is also substantial, being double the number of contracts expiring in March 2025 (73,000).
Strijers further explained that this expiration contract accounts for 44% of the total open interest in Bitcoin options (totaling $32 billion). Deribit exchange expects over $4 billion of these contracts to expire, which will inevitably trigger a significant amount of trading activity.
Deribit's volatility index (DVOL) has fluctuated sharply recently, and Strijers pointed out that this indicates traders still have significant disagreements 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 significantly decreased, and ETFs have experienced record outflows.
Despite net inflows remaining positive for cryptocurrency funds last week, cryptocurrency products faced record single-day outflows after Federal Reserve Chairman Jerome Powell's hawkish remarks, leading to a significant decline in inflows. According to CoinShares data, 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 there is still potential for a market 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 scenario in the short term. Sean McNulty, trading director at liquidity provider Arbelos Markets, believes: 'Bulls should maintain Bitcoin's price at the $90,000 level by the end of the year, but if it falls below that level, it could trigger further liquidations.'
According to MarketWatch data, typically, the 'Christmas rally' occurs in 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, this does not mean that investors should give up 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 sluggish in the last two weeks of the year, volatility should continue to decline, although persistent negative momentum may lead to slight losses, the market still has the potential for a strong rebound.'
