why Bitcoin price BTC USD today fell: Bitcoin price today: Why BTC USD fell below $86,000 and why $23 billion Bitcoin options expiry sparks year-end volatility fears
BTC USD price falls today as $23 billion worth of Bitcoin options expire raises volatility fears
Bitcoin options contracts worth approximately $23 billion, representing more than half of the total open interest on the largest Bitcoin options exchange Deribit, will expire next Friday, according to a Bloomberg report. The scale of the expiration suggests investors are preparing for further downside risk in an already increasingly volatile market.
Bitcoin price USD volatility rises amid $130 billion price swings
Volatility has been intense in recent sessions. During US trading on Wednesday, Bitcoin price surges exceeded $130 billion in a single hour, triggering a wave of liquidations on both long and short positions. The broader crypto market hovers around $3 trillion.
Nick Forster, founder of digital asset trading platform Derive.xyz, said, as quoted by Bloomberg, “Markets continue to fall as we enter the new year, with prices on a knife edge.”
“Overall, volatility remains high and defensive positioning continues, but upside tails have not been completely abandoned as markets prepare for a volatile start to the year,” he added, as quoted by Bloomberg.
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Bitcoin price (BTC USD) briefly recovered today before erasing gains
Bitcoin price briefly recovered on Thursday, jumping as much as 4% to $89,430, before giving up those gains and the world’s largest cryptocurrency is now down nearly 30% from the all-time high of $126,000 reached in early October.
Options market signals bearish Bitcoin positioning
Options market data shows a cautious and defensive stance. “Bitcoin positioning remains resolutely bearish. Thirty-day volatility has climbed to 45% while skewness is hovering around -5%. Longer-term skew has also stabilized around -5%, indicating investors are pricing in continued downside risk in the first and second quarters as ongoing selling pressure from previously inactive wallets weighs on spot prices,” Forster said. It is known as skewness, as quoted by Bloomberg.
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December 26 options expiration highlights key BTC USD price levels
Positioning ahead of the December 26 options expiration highlights a split in market expectations. The clustering of call options around strike prices of $100,000 and $120,000 indicates continued optimism about the year-end relief rally. However, bearish bets dominate in the near term, with heavy put option risk concentrated at $85,000. STS Digital estimates that this level has approximately $1.4 billion in open interest and could act as a price “magnet” until expiration.
Crypto investors look to MSCI decision and renewed hedging flows
Following expiration, traders are preparing to reposition around two upcoming catalysts. These include hedging and renewed call-on-write flows ahead of a Jan. 15 MSCI decision that could remove digital asset treasury firms with crypto assets exceeding 50% of assets from their indexes. “Together, these flows should increase downside volatility while increasing downside volatility,” said Maxime Seiler, CEO of STS Digital, as quoted by Bloomberg.
Bitcoin heading for worst quarter since 2022
Emotions remain fragile. Bitcoin is down 23% this quarter, on track for its worst quarterly performance since the second quarter of 2022, when the collapse of TerraUSD and Three Arrows Capital shook the crypto industry. BRN’s Timothy Misir said Bitcoin’s failure to regain key levels has left the market stuck in a “fragile holding pattern,” as quoted by Bloomberg.
FAQ
Why is Bitcoin price under pressure today?
Large option expirations and rising volatility are weighing on market sentiment.
What upcoming events could affect Bitcoin volatility?
MSCI decision taken on January 15 and renewed on-call write flows.
