From the historical high to the recent one-month low, Bit has experienced a roller coaster market in the past week.
Just less than a week ago, the price of Bit broke through $108,000, setting a new historical high, while in the past 24 hours, its price has fallen below $92,500, reaching the lowest level since November 26.
Over the past week, Bit has fallen by about 13%, Ethereum and Solana have fallen by 18% and 15% respectively, and XRP has fallen 12% to $2.18 during the same period. The MEME sector has been hit harder, with Dogecoin falling 22% over the past week.
The market is at a critical juncture at the end of the year. On the one hand, the largest-ever Bit options contract is about to expire, which may trigger violent fluctuations; on the other hand, the macroeconomic environment, especially the policy direction of the Federal Reserve, is putting additional pressure on the market.
$14 billion options expiration
This Friday, $14 billion in Bit options open interest (OI) will expire. According to data released by Deribit exchange CEO Luuk Strijers, the ratio of put options to call options in this expiration contract is 0.69, meaning that for every 10 call options, there are 7 put options. This indicates a certain degree of downside concern in the market. At the same time, the number of contracts expiring (146,000) is also not small, which is twice the number of contracts expiring in March 2025 (73,000).
Strijers further explained that the expiring contracts account for 44% of the total Bit options open interest (totaling $32 billion). Deribit exchange expects that more than $4 billion of these contracts will be executed upon expiration, which will inevitably trigger a lot of trading activity.
Deribit's volatility index (DVOL) has been fluctuating violently recently, Strijers pointed out that this means traders still have a large divergence in their views on the future market trend.
Strijers emphasized: "The previously dominant bullish momentum is waning, and the market is currently in a high-leverage upward state. If a significant decline occurs, it may trigger a rapid backlash effect. All eyes will be on the upcoming options expiration date, as it may set the tone for the market's trajectory in 2025."
Crypto fund inflows have declined significantly, ETFs see record outflows
Although crypto funds maintained net inflows last week, after Federal Reserve Chairman Powell's hawkish speech, crypto products experienced record single-day outflows, leading to a significant decline in inflows. CoinShares data shows that investors injected a total of $308 million into funds last week, including Bit ETFs. But on Thursday alone, investors withdrew a record $576 million, and the outflow rose to $1 billion on Friday.
Institutional activity may decrease, but the market still has a chance of rebound
David Lawant, head of research at crypto broker FalconX, wrote in a report that in the short term, price volatility remains "the most likely scenario" before a "bullish trajectory" appears in the first quarter of 2025, Sean McNulty, head trader at liquidity provider Arbelos Markets, believes: "Bulls should keep Bit's price above $90,000 by the end of the year, but if it falls below that level, it may trigger further liquidation."
According to MarketWatch data, the "Santa Claus rally" typically occurs in the last five trading days of the year and the first two trading days of the new year.
BRN analyst Valentin Fournier said that although crypto market trading activity may decrease in the remaining time this year, this does not mean that investors should give up hope for the "Santa Claus rally". In a report on Monday, he wrote: "With the expected decline in institutional activity and retail trading volume expected to remain subdued in the last two weeks of the year, volatility should continue to decline, and while the persistent negative momentum may lead to a slight loss, the market still has the potential for a strong rebound."
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