Bitcoin, the best-known Cryptocurrency, has fallen more than 8% from its all-time high of $99,830, reached on November 22, standing at $91,377 at Tuesday’s close. This pullback comes after an impressive 120% annual rally and 34% monthly increase, fueled by the election of Donald Trump as US President and his promise to turn the country into the “crypto capital of the planet.”
Market expectations: options at play
According to Nick Forster, founder of decentralized options protocol Derive, recent activity in options shows a significant shift towards more defensive strategies. The call-put skew ratio for the December 27 expiration fell 30% in the last 24 hours, indicating an increase in demand for put options, while calls continue to dominate.
Investors are hedging against potential downside risks, Forster noted. However, these corrections are not unusual in bull markets.
Odds for December 27
With $11.8 billion in Bitcoin options set to expire that day, the market anticipates major moves:
- 68% probability: A drop of 16.03% towards $81,493 or an increase of 19.9% towards $115,579.
- 5% chance: Extreme moves, such as a 29.49% drop to $68.429 or a 41.83% rise to $137.645.
- Chances of $100,000: They increased to 45% compared to 34% last week, with a 4% probability of exceeding $150,000.
Stable Volatility: A Sign of Future Moves?
Derive’s analysis shows that the 7-day implied volatility remains at 63%, while the 30-day implied volatility is at 55%. This convergence suggests that the market expects significant movements in the short term.
The impact of profit taking
One of the factors behind the recent decline is profit-taking by investors. According to Anthony Pompliano, CEO of Professional Capital Management, data from _checkonchain.com revealed that long-term holders have distributed $60 billion in the last 30 days, with November being the largest distribution month of the cycle, with 21% of the supply sold.
Conclusion
Bitcoin faces a pivotal moment with options expiry in December. While corrections in bull markets are common, institutional interest and stable volatility point to significant moves in the near term. Market attention is now focused on whether Bitcoin will be able to break the $100,000 barrier or face a steeper correction.
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