Bitcoin may be a hot topic for discussion on dinner tables today at Thanksgiving but not for the very best reasons – the crypto is down from a high of $59,258 to the current rate of $54,738. A total of $3.2 billion worth of Bitcoin options are set to expire today being Black Friday, and this has sparked an increased bearish momentum and volatility.
The volatility and the bearish trend were expected as the majority of the buys were put options. With a highly positive put-call skew, the trend was favoring a bearish trend before contract expiry. Those holding put options were expected to sell in order to get the profits from their options before the 73,702 contracts expired, which definitely puts more selling pressure on the Bitcoin price. The expiry of BTC options has historically always brought volatility.
Most of these monthly options – or a total of $2.6 billion, were settled at the largest derivative market Deribit.
The bears needed to lower the price below $57,000 in this dump or they would have lost a huge amount of money, which they did. Despite the bulls battling the price to a meaningful $59,000 on Thursday night to save from hefty losses towards the expiry of the contract, the price went to as low as $57,500 by Friday morning and further down.
It is expected, however, that Bitcoin price will resume recovery after today following the contract expiry. However, the psychological level to beat for the bulls remains $60,000.
The tumbling also coincides with the admission by PlanB – a popular proponent of the Stock-To-Flow BTC price model that predicted $100,000 by end of this year. He stated that the BTC price will likely not hit $98,000 by the end of November as earlier predicted. However, according to him, the model is still unaffected and the price could still reach the $100,000 mark by end of the year.
It also comes in the wake of tapering volumes. In fact, retail interest for Bitcoin as witnessed in the Google searches, for instance, has fallen to levels they were back in 2017.