Bitcoin disappoints traders: Bearish bets increase after $100K failure
Investors in the world’s largest cryptocurrency are anticipating a major downside move after bitcoin failed to reach a record high of $100,000, according to a cryptocurrency trading platform citing recent options activity.
Bitcoin hit a record high of $99,830 on Nov. 22 but has since fallen more than 8% to a one-week low of $91,377.32 on Tuesday.
The most popular cryptocurrency has surged 120% so far this year and about 34% this month as Donald Trump was elected U.S. president and a group of pro-crypto lawmakers entered Congress. Trump embraced digital assets during his campaign, promising to make the United States the “crypto capital of the planet” and build a national stockpile of bitcoin.
Nick Forster, founder of the decentralized options protocol on the network Deriv with a total trading volume of $7.1 billion, said in emailed comments on Tuesday that the so-called buy-sell skew indicator for Bitcoin’s Dec. 27 expiration showed a significant 30% drop in the last 24 hours as market participants shifted toward more protective strategies. The buy-sell skew, which reflects market sentiment, refers to the difference in implied volatility between calls (calls) and puts (puts). The skew still shows a predominance of calls over options, though it has since declined.
“This suggests that traders are hedging against potential downside risk,” Forster said, likely in response to Bitcoin’s sharp decline. “However, such pullbacks are not uncommon in bull markets.” Investors are looking ahead to Dec. 27, when $11.8 billion worth of Bitcoin options expire, which could lead to big moves in either direction. According to Foster, there is a 68% chance that Bitcoin will move 16.03% lower to $81,493 or 19.9% higher to $115,579 by December 27. However, there is a smaller probability of about 5% of Bitcoin’s larger moves — a 29.49% drop to $68,429 or a 41.83% rise to $137,645 by the same date.
Deriv data also showed a 45% higher probability of Bitcoin hitting $100,000, up from 34% last week, with a new 4% chance of surpassing $150,000.
Foster also noted that Bitcoin’s volatility has stabilized over the past seven days, with the 7-day implied volatility at 63% and the 30-day implied volatility at 55%.
“This close alignment suggests that the market is expecting big moves soon.”
Bitcoin has pulled back from its recent highs, and one reason market participants have cited for the decline is profit-taking.
Anthony Pompliano, founder and CEO of Professional Capital Management, cited analysis from _checkonchain.com in his letter to clients on Tuesday, which indicated that long-term holders have released $60 billion of supply in the past 30 days.
Of the long-term supply that has moved since bitcoin hit a low of $15,479 during the FTX crash two years ago, 21% of it has happened in November, “the largest profit-taking we’ve seen so far this cycle,” according to a post by _checkonchain.com on X.