Bitcoin’s price reached a peak of $99,830 on November 22nd but has since retraced, dropping over 8% to hit a one-week low of $91,377.32 on the most recent Tuesday.
Despite this recent dip, the flagship cryptocurrency has experienced substantial growth this year, soaring by 120% year-to-date and approximately 34% this month. This surge is partly attributed to factors such as the election of Donald Trump as U.S. president and the election of lawmakers favorable to digital assets in Congress. During his campaign, Trump expressed support for digital currencies, vowing to make the United States the leading global hub for crypto innovation and to establish a national Bitcoin reserve.
Nick Forster, the founder of Derive, a decentralized protocol focused on on-chain options trading with a total trade volume of $7.1 billion, commented via email on Tuesday. He noted a significant 30% decrease in the call-put skew index for Bitcoin options expiring on December 27th within the past 24 hours, suggesting that traders are increasingly adopting risk-averse strategies.
The call-put skew, a metric reflecting market sentiment, represents the difference in implied volatility between call options (the right to buy) and put options (the right to sell). While the skew continues to indicate a higher volume of call options compared to put options, the difference has narrowed.
Forster explained, “This indicates that traders are implementing hedges to protect against potential price declines,” potentially as a reaction to Bitcoin’s recent price drop. He added, “However, pullbacks of this nature are common occurrences within bull markets.” Market participants are keenly observing the expiration of $11.8 billion in Bitcoin options on December 27th, an event that could trigger significant price volatility in either direction. According to Forster’s analysis, there’s a 68% likelihood of Bitcoin’s price moving either 16.03% downwards to $81,493 or 19.9% upwards to $115,579 by December 27th. However, a less probable scenario, with a roughly 5% chance, involves more substantial price fluctuations: a 29.49% decrease to $68,429 or a 41.83% increase to $137,645 by the same deadline. Derive’s data also suggests an increased probability, rising from 34% last week to 45%, of Bitcoin reaching $100,000, with a new 4% chance of exceeding $150,000.
Forster further pointed out the consistent level of Bitcoin volatility over the past week, with the seven-day at-the-money implied volatility at 63% and the 30-day level at 55%.
“This close alignment suggests the market anticipates significant movements soon.”
Bitcoin has retreated from its recent high, a move attributed by market observers to profit-taking activities.
Anthony Pompliano, founder and CEO of Professional Capital Management, mentioned in a recent client communication on Tuesday an analysis from _checkonchain.com, indicating that long-term holders have divested $60 billion worth of Bitcoin holdings in the past 30 days.
According to a post by _checkonchain.com on X, of the Bitcoin supply moved by long-term holders since Bitcoin’s low of $15,479 during the FTX collapse two years prior, 21% has been moved during November, which constitutes the “heaviest profit-taking we have seen so far this cycle.”