Bitcoin hit a record high of US$99,830 on Nov 22, but it has since fallen more than 8% to a one-week low of US$91,377.32 on Tuesday.
The best-known cryptocurrency has soared 120% so far this year and about 34% this month with the election of Donald Trump as US president and a slew of pro-crypto lawmakers in Congress. Trump embraced digital assets during his campaign, promising to make the US the “crypto capital of the planet,” and accumulate a national stockpile of Bitcoin.
Nick Forster, founder of onchain options decentralised protocol Derive with total trade volume of US$7.1 billion, said in emailed comments on Tuesday that the so-called call-put skew index for the upcoming Dec 27 Bitcoin expiry showed a significant 30% drop in the last 24 hours, as market participants shifted toward more protective strategies.
The call-put skew, which reflects market sentiment, refers to the difference in implied volatility between calls (options to buy) and puts (options to sell). This skew still shows a preponderance of calls over puts, although it has since declined.
“It suggests traders are hedging against potential downside risks,” Forster said, likely in response to BTC falling sharply.
“However, pullbacks like these are not uncommon in bull markets.”
Investors are looking to Dec 27, when US$11.8 billion in Bitcoin options expire that could trigger major moves in either direction.
According to Foster, there is a 68% chance of Bitcoin moving 16.03% lower to US$81,493 or 19.9% higher to US$115,579 by Dec 27. There is, however, a smaller probability of about 5% of Bitcoin making bigger moves – a 29.49% fall to US$68,429 or a 41.83% surge to US$137,645 by the same date.
Derive data also showed higher odds of 45% of Bitcoin hitting US$100,000, from last week’s 34%, with a new 4% probability of surpassing US$150,000.
Forster also noted stability in Bitcoin’s volatility in the last seven days, with the seven-day at the money implied volatility at 63% and the 30-day level at 55%.
“This close alignment suggests the market anticipates significant movements soon.”
Bitcoin has come off its high perch for now, and one of reasons cited by market participants for the decline was good old profit-taking.
Anthony Pompliano, founder and chief executive officer at Professional Capital Management, in his letter to clients on Tuesday, cited _checkonchain.com analysis, which noted that long-term holders have distributed US$60 billion worth of supply in the last 30-days.
Of long-term holders’ supply moved since the Bitcoin’s bottom of US$15,479 hit during the FTX collapse two years ago, 21% of it has happened in November, which is the “heaviest profit-taking we have seen so far this cycle,” according to a post of _checkonchain.com on X.