The crypto market retreated suddenly in the American session, erasing the gains made earlier during the day, as investors waited for the biggest options expiry of the year.
Summary
- The crypto market retreated suddenly as traders waited for the options expiry.
- Bitcoin and Ethereum options worth over $28 billion will expire today, Dec. 26.
- BTC technical analysis points to an eventual bearish breakout.
Crypto Market Braces for $28 Billion Options Expiry
Bitcoin (BTC) struggled with its price, dropping below $87,000 after reaching an intraday high of $89,000. Other major cryptocurrencies, including Binance Coin (BNB) and Dogecoin (DOGE), followed suit, each experiencing declines of over 3% over the past 24 hours. This swift downturn came as investors kept an eye on the impending expiration of options contracts worth more than $28 billion.
The market’s retreat aligned closely with movements in the U.S. stock market, where the Dow Jones Industrial Average fell by 70 basis points. As the holiday season continued, trading volume remained notably low, with many investors away from their desks. Such holidays often lead to skittish behavior among traders, heightening the risks in both traditional and digital asset markets.
The next significant event for the crypto landscape will unfold later today, coinciding with the largest options expiry of the year. A staggering $23 billion worth of Bitcoin options and another $4 billion for Ethereum options will be expiring on the trading platform Deribit. This confluence of expirations is expected to instigate further market fluctuations.
Bitcoin’s options currently show a put-call ratio of 0.38, highlighting a bullish skew wherein calls are outpacing puts. Market watchers have identified key resistance levels between $100,000 and $116,000, while the maximum pain point—an area where most options would expire worthless—rests at $96,000.
In addition, a total of 1.28 million Ethereum (ETH) options, valued at over $4 billion, are also approaching their expiration. The put-call ratio for Ethereum is slightly higher, ranging from 0.43 to 0.45, indicating a similarly bullish sentiment. The primary concentrations for Ethereum strike prices lie between $3,000 and $3,100, with their maximum pain point positioned at $3,000.
The lead-up to significant options expirations often spikes volatility in the crypto arena. This time, the expected volatility is intensified by a thin market volume, as many traders remain off for the holidays. Consequently, traders should exercise caution, as even minor fluctuations could yield outsized impacts on prices.
Bitcoin Price Action Points to More Cryptocurrency Pain
Analyzing the three-day chart reveals that Bitcoin’s price action indicates rising pressure, with multiple bearish patterns emerging. Traders are closely monitoring these developments, as they could foresee further downside momentum in the short term.
Currently, Bitcoin is displaying a rising wedge pattern—a technical formation defined by two ascending, converging trendlines. This pattern is often interpreted as a signal that a price breakdown may be imminent. Alongside this, Bitcoin has also formed a bearish pennant pattern, exhibiting both a vertical price movement and a symmetrical triangle formation.
Adding to the bearish sentiment is the impending formation of a death cross, characterized by the narrowing gap between the 50-day and 200-day weighted moving averages. If Bitcoin fails to maintain its footing, it could potentially fall to the November low of $80,000. A break below this threshold may suggest a deeper decline, potentially targeting $75,000 in the forthcoming trading sessions.
