Traders expect bitcoin (BTC) choppiness to continue with a possible spin on altcoins, as major options expirations weigh on market dynamics in the upcoming festive week.
“All eyes are on the massive expiry this Friday, where nearly $20B notional in BTC and ETH options will expire,” Singapore-based QCP Capital said in a broadcast message on Tuesday . “This represents almost half of the total OI on Deribit. We believe this is very possible especially if the spot continues to range here and as option sellers continue to issue their shorts.
“Rolling” means that instead of letting their options expire, traders move their positions to the final expiration dates. This is often done to keep the trade active if they still believe in their market forecast.
High volatility can be good for option buyers because it increases the chance that the option will be “in-the-money” (profitable) at some point before expiration — creating a profit for the buyer.
“As BTC continues to struggle below 100k, we may also see alts start to play again,” QCP said, adding that a similar trend was observed a month ago when bitcoin was trading at current price levels. The ether/bitcoin ratio bounced off the 0.032 support at the time, as reportedfueling movement in altcoins.
The crypto market often goes through cycles where bitcoin leads the charge, followed by altcoins. Investors sitting on new market profits are looking for additional income, and the flow of capital into altcoins leads to wild rallies in the short term.
Bitcoin is currently going through one of its worst Decembers so far, ending a seasonally bullish period with a 2% decline over the past 30 days. Hope of a “Santa Rally” — where the asset tends to rise during the festive week — has been skewed amid profit taking and a cautious mood after weeks of price hikes.
Some are warning of further decline as the US Federal Reserve has hinted at fewer rate cuts for next year while stressing that it prohibits state holdings of BTC and is not seeking a change in the law to do so.
But a drop to the $90,000 level could signal another opportunity for market traders, FxPro’s Alex Kuptsikevich told CoinDesk in an email.
“In a potential shock scenario, bitcoin could suddenly sink to the $70K area. However, there are more chances that a pullback to $90K in the next two weeks will be attractive enough for buyers to stop selling,” Kuptsikevich said. “Markets continue to dig tighter Fed’s tone, fueled by a pent-up desire to lock in earnings after a strong year.”
