Bitcoin (BTC) traders are bracing for continued choppiness in the market, with a potential shift towards altcoins as a major options expiry looms in the upcoming festive week. The market is closely watching the massive expiry scheduled for this Friday, where nearly $20 billion notional value across BTC and ETH options will expire. This accounts for almost half of the total Open Interest (OI) on Deribit, a popular cryptocurrency options exchange. Traders believe that if the spot price continues to range and option sellers roll their shorts out, the expiry could have a significant impact on market dynamics.
The concept of “rolling” options refers to traders shifting their positions to later expiration dates instead of letting them expire. This strategy is often employed to keep the trade active if traders still believe in their market forecast. High volatility in the market can benefit option buyers by increasing the likelihood of the option being profitable before expiry.
Amidst the uncertainty surrounding bitcoin’s price movements, there is a possibility of altcoins gaining momentum once again. A similar trend was observed a month ago when bitcoin was trading at current levels, with the ether/bitcoin ratio bouncing off a support level and leading to increased activity in altcoins. The cryptocurrency market tends to go through cycles where bitcoin leads the way, followed by a surge in altcoin prices as investors seek additional returns.
Bitcoin has faced a challenging December, with a 2% decline over the past month, dampening hopes of a traditional “Santa rally” in the festive week. Some market analysts are warning of further price declines following signals from the U.S. Federal Reserve regarding potential rate cuts next year. Additionally, the Fed has reiterated its stance against state holdings of BTC, further adding to the cautious sentiment in the market.
Despite the current market conditions, some traders see opportunities for bitcoin to rebound. FxPro’s Alex Kuptsikevich believes that a drop to the $90,000 level could attract buyers and potentially halt the ongoing sell-off. While a sudden dip to the $70,000 range is a possibility in a worst-case scenario, there is a higher likelihood of a pullback to $90,000 being seen as an attractive entry point for buyers. The market is still digesting the Fed’s recent statements and the need to secure profits after a strong year of price growth.
In conclusion, the cryptocurrency market is gearing up for a week of heightened volatility and potential price swings as the major options expiry approaches. Traders are closely monitoring market dynamics and preparing for possible shifts in capital flows towards altcoins. Despite the current challenges facing bitcoin, there is optimism for a potential rebound in the near future. The world is a hectic and fast-paced place, with people constantly on the move and looking for ways to stay connected. In today’s society, technology plays a crucial role in keeping us all connected and informed. From smartphones to social media platforms, there are countless ways for us to stay in touch with one another.
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