Traders are bracing for more fluctuations in Bitcoin (BTC) as the market gears up for a potential shift toward altcoins. With a significant options expiry approaching, market dynamics could get a shake-up right in the middle of the festive season.
QCP Capital, based in Singapore, recently highlighted the importance of this upcoming expiry. “All eyes are on the massive expiry this Friday, where almost $20B notional across BTC and ETH options will expire,” they stated. This event represents nearly half of the total open interest on Deribit, setting the stage for possible market movements. If the spot price continues to tread water, traders, known as option sellers, might begin to “roll” their shorts, maintaining their positions in anticipation of better return possibilities.
The term “rolling” refers to traders shifting to later expiration dates instead of allowing their options to lapse. This strategy can help keep their trades active if they still foresee potential profits.
High volatility tends to favor option buyers, as it raises the likelihood that their options could become “in-the-money” before expiry—resulting in profits for those savvy traders.
QCP noted, “As BTC continues to struggle below $100,000, we could also see alts start to play catch up again.” This insight echoes past market behavior seen just last month—a time when Bitcoin’s price hovered around current levels. Interestingly, the ether/bitcoin ratio found support at 0.032, which sparked revitalized action in altcoins.
The cryptocurrency market is characterized by cycles, often starting with Bitcoin leading the trend, followed by altcoins gaining momentum. Investors, eager to capitalize on fresh gains, often pivot to altcoins, triggering rapid price surges.
Currently, Bitcoin is facing one of its trickiest December months, with a 2% drop over the last 30 days. Enthusiasm for a potential “Santa rally”—a phenomenon where prices typically soar during the holiday season—is dampened by cautious sentiment and profit-taking after a series of price fluctuations.
Given the hints from the U.S. Federal Reserve regarding fewer rate cuts anticipated for next year, some industry voices are cautioning about potential further downturns. Notably, the Fed has reaffirmed its stance against state holdings of BTC, showing no intention of altering existing laws.
However, analysts like Alex Kuptsikevich from FxPro believe that a pullback to the $90,000 level could create enticing buying opportunities for traders. Kuptsikevich reassured, “In a potential shock scenario, Bitcoin could suddenly dip into the $70K area. However, the chances are higher that a move back to $90K in the coming weeks will be attractive enough for buyers to halt the sell-off.” Market participants are keenly assessing the implications of the Fed’s tougher rhetoric, which is compounded by the urge to secure profits after a lucrative year.
With such dynamics unfolding, the coming weeks might see altcoins gaining traction as they respond to Bitcoin’s price movements and market sentiment. All eyes remain on what might happen as traders position themselves during this pivotal time.
