The cryptocurrency market is experiencing heightened volatility as it approaches a significant options expiry worth $28 billion. Bitcoin (BTC) has seen a decline, dropping below $87,000 after reaching an intraday peak of $89,000. Other notable cryptocurrencies, including Binance Coin (BNB) and Dogecoin (DOGE), have also faced downward pressure, each decreasing by over 3% within the past 24 hours.
This sudden retreat in the crypto market aligns with a similar downturn in the U.S. stock market, where the blue-chip Dow Jones index fell by 70 basis points. Notably, trading volumes across both markets remain low, attributed to many traders being on holiday.
As the industry prepares for the largest options expiry of the year, anticipation builds. This event involves over $23 billion in Bitcoin options and an additional $4 billion in Ethereum options expiring on the Deribit exchange. The put-call ratio for Bitcoin stands at 0.38, suggesting a bullish sentiment as calls significantly outnumber puts. The primary concentrations of bullish options lie between $100,000 and $116,000, while the maximum pain point is identified at $96,000. This maximum pain point refers to a price level where the majority of options expire worthless.
In parallel, approximately 1.28 million Ethereum (ETH) options valued at over $4 billion are set to expire, with a put-call ratio between 0.43 and 0.45 indicating a similar bullish bias. The key strike price concentration for Ethereum options is between $3,000 and $3,100, with a maximum pain point established at $3,000.
The cryptocurrency market typically experiences increased volatility surrounding major options expirations, a situation exacerbated by the current low trading volume. The price action of Bitcoin suggests that further declines may be on the horizon. A three-day chart analysis reveals that Bitcoin is under pressure, having formed several bearish patterns that could lead to further downside risk in the near term. Among these patterns, a rising wedge has emerged, characterized by two ascending, converging trendlines, alongside a bearish pennant pattern, which consists of a vertical line and a symmetrical triangle.
Additionally, Bitcoin is nearing the formation of a death cross, as the gap between the 50-day and 200-day Weighted Moving Averages narrows. If the price falls below the November low of $80,000, it could signal further declines, potentially reaching $75,000.
