Original 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, the price of Bitcoin hit a record high of over $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 at the end of the year. On the one hand, the largest Bitcoin options contract in history is about to expire, which may cause drastic fluctuations; on the other hand, the macroeconomic environment, especially the policy direction of the Federal Reserve, has brought additional pressure to the market.
$14 billion worth of options 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 contract is 0.69, that is, for every 10 call options, there are 7 put options. This shows that there is a certain degree of downside concern in the market. At the same time, the number of contracts expiring this time (146,000) is not small, which is twice the number of contracts expiring in March 2025 (73,000).
Strijers further explained that the current expiration accounts for 44% of the total open interest of all Bitcoin options contracts (a total of $32 billion). Deribit exchange expects more than $4 billion of these contracts to expire, which is bound to trigger a large amount of trading activity.
Deribit’s volatility index (DVOL) has fluctuated wildly recently, and Strijers pointed out that this means that traders still have large differences in their views on the future direction of the market.
Strijers stressed: The previously dominant bullish momentum is fading and the market is currently in a highly leveraged upside. If there is a sharp drop, it may trigger a rapid backlash. All eyes will be on the upcoming option contract expiration date, as it may set the tone for market trends in 2025.
Cryptocurrency fund inflows plummet, ETFs suffer record outflows
Although cryptocurrency funds still maintained net inflows last week, cryptocurrency products suffered a record one-day outflow after Fed Chairman Powell made a hawkish speech, causing inflows to drop sharply. CoinShares data showed that investors injected a total of $308 million into funds last week, including Bitcoin ETFs. But on Thursday alone, investors withdrew a record $576 million, and outflows rose to $1 billion on Friday.
Institutional activities may decrease, but the market may still rebound
David Lawant, head of research at crypto broker FalconX, wrote in a report that short-term price volatility remains the most likely scenario before a bullish trajectory emerges in the first quarter of 2025. Sean McNulty, head of trading at liquidity provider Arbelos Markets, believes that bulls should keep Bitcoins price at $90,000 until the end of the year, but a break below that level could trigger further liquidations.
According to MarketWatch data, the Christmas rally usually occurs in the last five trading days of each year and the first two trading days after the New Year.
Valentin Fournier, an analyst at BRN, said that while the cryptocurrency market may see less trading activity for the rest of the year, it does not mean that investors should give up hope for a Christmas rally. He wrote in a report on Monday: With expectations of lower institutional activity and retail trading volumes expected to remain subdued in the last two weeks of the year, volatility should continue to decline, and while continued negative momentum could lead to small losses, the market still has the potential for a strong rebound.
