By Jessica Murdock
Bitcoin Fails to Reach $100,000, Sparking More Pessimism in Options Markets
NEW YORK, Nov 26 (Reuters) – Bitcoin’s failure to breach the coveted $100,000 mark has prompted increased bets on a downward move, according to recent data from a leading crypto trading platform. After hitting a record high of $99,830 on November 22, Bitcoin has since retreated by more than 8%, dropping to a one-week low of $91,377.32 on Tuesday. Despite this pullback, Bitcoin has surged 120% this year and saw a 34% increase in November, spurred by a mix of positive market sentiment, including the election of Donald Trump as U.S. president, who voiced support for digital assets during his campaign.
Options Activity Signals Potential Downward Pressure
Nick Forster, founder of the decentralized options protocol Derive, which handles a total trade volume of $7.1 billion, explained that the latest call-put skew index for Bitcoin options expiring on December 27 has shown a significant 30% drop in the last 24 hours. This suggests a shift towards more defensive positions as traders hedge against possible price declines. The call-put skew, which measures the difference in implied volatility between call options (buying) and put options (selling), reveals that while calls are still more prevalent, there has been a notable decline in their dominance, signaling market concern over potential downside risks.
Volatility Indicators Point to Large Potential Moves
The expiration of $11.8 billion in Bitcoin options on December 27 is likely to spark significant market moves, with the possibility of either a major rally or a sharp decline. Forster stated that there’s a 68% probability Bitcoin could move 16.03% lower to around $81,493, or rise 19.9% to $115,579 by that date. There’s also a smaller, but still notable, chance of Bitcoin experiencing even more drastic fluctuations, with 5% odds of it dropping 29.49% to $68,429, or surging 41.83% to $137,645.
Increased Probability of Bitcoin Reaching $100,000
Forster also highlighted an increase in the odds of Bitcoin reaching the $100,000 threshold, now standing at 45%, up from 34% last week. Meanwhile, the probability of Bitcoin surpassing $150,000 has risen slightly to 4%. Despite the pullback, market participants are still expecting the possibility of significant price movements before the end of the year, underscoring the inherent volatility in Bitcoin markets.
Profit-Taking Contributing to Bitcoin’s Decline
The recent decline in Bitcoin’s price is also attributed to profit-taking by long-term holders. According to analysis by checkonchain.com, long-term holders have distributed $60 billion worth of Bitcoin in the last 30 days alone, with 21% of this movement occurring in November. This represents the largest profit-taking activity seen this cycle since the price bottomed out at $15,479 during the FTX collapse two years ago. The sharp rise in profit-taking is one of the key factors behind the recent price retreat.
