Bitcoin, the biggest cryptocurrency, reversed its course after flirting at the $100,000 mark.
Digital asset has dropped from a high of $91,830 reached on 22 November to a low of just under $90,377.32 at the end of last week.
According to CoinGecko, BTC was worth $93,099 as of Wednesday morning at 11:48 IST.
This is despite the fact that 2024 saw a 120% increase, fueled by bullish sentiment in the market following Donald Trump’s victory at presidential elections.
Trump’s crypto-friendly stance has been a major factor in driving the demand. He made pledges, such as to establish the US as a leader of cryptocurrency and build a bitcoin national stockpile.
Investors focus on protective strategies
The market activity indicates that bitcoin investors are becoming more cautious.
Nick Forster of Derive, a platform for on-chain option trading with a total volume of $7.1 billion, has noted an important shift in the sentiment.
Call-put skew for bitcoin expiration on December 27 has dropped by 30% over the past 24 hours. This indicates a rise in hedges.
Forster, a Reuters reporter, said that the decline in skew reflects trader’s hedging of potential downside risks.
Calls–options for buying bitcoin- still outnumber put–options for selling- the trend indicates a cautious, probably influenced by Bitcoin’s recent sharp decline from its high.
Expect major price changes around expiration of options
Bitcoin prices could be affected by the expiration of options worth $11.8 billion on December 27.
Forster predicts that there will be a 68% chance of bitcoin moving 16% down to $81,493 by the end of this year or 20% up to $115 579.
The extreme scenarios are a decline of 29.5% to $68,429, or an increase by 41.8% to $137 645, but these outcomes only have a 5% chance.
Data from Derive indicates that there is a chance of 45% of bitcoin reaching $100,000 once again. There are only 4% of Bitcoins exceeding $150,000.
Profit-taking drives selling pressure
Bitcoin’s recent decline is a result of long-term investors taking profits.
According to _checkonchain.com, $60 billion in bitcoins have been distributed over the last 30 days.
Long-term bitcoin holders took the biggest profit in November since the low price of $16,479 that was reached during the FTX crash two years earlier.
Anthony Pompliano of Professional Capital Management cited these data in an email to clients and highlighted its importance on the market.
Bitcoin’s volatility metrics are stable despite recent drops, suggesting that the market will continue to experience swings.
The implied volatility of the cryptocurrency for seven days is 63%. This level closely matches that of 30 day’s 55%.
Forster said, “This tight alignment shows traders expect significant price changes soon.”
The post Bitcoin Options: Increased caution in the face of $100K eluded may change as new updates are released.
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