The cryptocurrency market faced a setback after Bitcoin [BTC], the world’s largest digital asset, saw a significant price drop of 5.47% in just one minute, after surpassing the historic $100,000 mark for the first time.
This marked drop in prices changed overall market sentiment as traders liquidated nearly a billion dollars from long and short positions.
The probability of such a significant price drop is not yet known. However, data from on-chain analytics firm Coinglass reported that a large influx to exchanges could be responsible for this drop in prices.
Bitcoin’s instant flow/flow metrics reported that exchanges saw a large inflow of $732.5 million of bitcoin. In the context of cryptocurrencies, “outflow” refers to the movement of assets from portfolios to exchanges, which is often seen as a sign of selling pressure and a possible drop in prices.
However, the recent drop in prices has created fear among traders and investors and raised further concerns about whether the price will fall further or whether the market will rebound.
Bitcoin is consolidating in a narrow range between $92,000 and $99,100. However, the recent breakout from this area appears to have been a bullish trap, as Bitcoin failed to maintain its position above the range and fell back within it.
Based on recent price movements, if Bitcoin breaks through the upper border of the range and closes a daily candlestick above the $99,700 level, there is a strong probability that it will once again cross the $100,000 mark and maintain its position.
Conversely, if Bitcoin breaks through the range and closes a daily candlestick below the $91,500 level, there is a strong possibility that it will fall to the $86,000 level.
Bitcoin and Ethereum market volatility before options expire
Bitcoin (BTC) and Ethereum (ETH) are heading for their first weekly options expiry in December. The event may increase market volatility, with clear potential for a new trend after the expiration of contracts.
Bitcoin (BTC) and Ethereum (ETH) are preparing for more volatility ahead of the expiration of weekly options. December contracts are already setting the pace of prices at the end of 2024. The expiration comes at a time when the price of spot Bitcoin is volatile in the near term, although it shows a trend of recovery. Bitcoin rose again to $98,237.17, while still trading at the level of “greedy” sentiment”.
As of December 6, Bitcoin had a weekly expiry of 23,000 contract options, with a face value of $2.3 billion and a maximum pain of $97,000. The 1.1 buy/sell ratio suggested a relative balance between long and short positions.
ETH options have accumulated only $570K during the week but with a buy/sell ratio of 0.62. The ratio indicates a stronger bullish position for ETH, with the price approaching $4,000.
Even without other factors, trading before weekends and options expiry boosts short-term volatility. For Bitcoin, the expiration of options also precedes larger price rises. The expiration of $13.6 billion options in November was preceded by the recent rise to $104,000.
Bitcoin’s march stalled as it endured a worrying rapid collapse to $93,000. The expiration event may have added options to volatility. The rapid collapse liquidated up to $450 million in leveraged positions. The event continued on Friday, with a total liquidation of $1 billion from short positions.
Other explanations include quick liquidation, as well as normalizing Bitcoin’s levels to available liquidity. The short may be due to relatively large put option positions, which will be liquidated in a lower price range.
Bitcoin and Ethereum: Price Battle and Breakout Prospects
Bitcoin has recovered above $97,000, but may still face price pressure from long positions in a lower price range. One liquidation target holds more than $84 million in leveraged positions at $95,322, plus $73.52 million in leveraged positions at $94,011.
Recent volatile price movements may not reflect long-term opportunities, but they still lead to a reassessment of whether Bitcoin could rise, or whether it has already reached a cycle peak.
Options trading also gives an overview of the expected performance. The largest liquidity for call options can be seen at $100,000, followed by an increase at $110,000 and $120,000. These options signal cautious trading of year-end levels.
Bitcoin’s price movements in December may be further affected by options scheduled to expire on the twenty-seventh. One of the largest contracts with a face value of $229 million is the call option at $110,000. For more cautious traders, $96,000 and $120,000 call options have roughly similar sizes, exploring pessimistic and optimistic scenarios.
Will Ether finally show its upside?
The ratio of bullish options for Ether indicates the expectation of a breakout above $4,000. The resistance level at $3,600 has turned into support in the past few days. Ether traders may also attack accumulated short positions, all above the current price. Heat Filter Map Indicates $877 Million in Attackable Positions.
Ether has benefited from highly active ETF flows that have reached an unprecedented peak. Last day, exchange-traded fund inflows expanded to $428.44 million, surpassing the past few months of inflows.
At the moment, ETH still lags behind BTC in terms of activity and leveraged liquidity. However, a slowdown in BTC’s rally could lead to its conversion to ETH on the hope of a breakout.
