In a quiet trading session, Bitcoin and Ethereum prices are maintaining stability as traders adopt a cautious stance leading up to a notable options expiry later this week. The total cryptocurrency market capitalization has decreased by 0.8%, settling at $3.07 trillion.
At the time of writing, Bitcoin is priced at $88,088, reflecting a 0.7% decline over the last 24 hours. Meanwhile, Ethereum has dropped by 1% to $2,987. Other notable cryptocurrencies, such as Chainlink and Sui, have also experienced minor setbacks, with prices falling to $12.49 and $1.45 respectively.
Smaller altcoins, including Zcash, Monero, and Ethena, have seen even steeper declines, exceeding 5%. This trend indicates a fragile market sentiment, as evidenced by the Crypto Fear & Greed Index, which has slipped one point to 24, categorizing the market firmly within extreme fear.
Data from CoinGlass has highlighted growing stress beneath the surface, showing a significant increase in 24-hour liquidations to $222 million, an 11% rise. Additionally, the total open interest in the crypto market has climbed to $129 billion, reflecting a 1.1% increase. Despite these figures, the average market Relative Strength Index (RSI) stands at 47, suggesting a neutral momentum within the market.
Traders are bracing for a historic options expiry, with estimates ranging from $27 billion to $28.5 billion in Bitcoin and Ethereum contracts set to expire on Deribit on December 26. The composition of this expiry reveals that Bitcoin options constitute roughly $23.6 billion, while Ethereum options amount to approximately $3.8 billion, marking this as the largest expiry in the exchange”s history.
Options contracts grant traders the right to buy or sell assets at predetermined prices. When substantial volumes of contracts accumulate around key strike prices, market makers typically engage in hedging activities via spot market transactions. This hedging effect may continue to restrict price movements until the options are settled.
As underlying volatility continues to rise, actual price movements have remained relatively stable, primarily due to substantial positioning around critical Bitcoin strike prices. Many traders are adopting a wait-and-see approach, refraining from new trades until they observe how the market reacts post-expiry.
The holiday season also contributes to a sense of caution, as trading volumes typically decline in December as participants reduce their exposure and finalize their accounts for the year. Since peaking above $125,000 in October, Bitcoin has experienced a pullback of approximately 28% to 30%, with the market still processing this downturn.
Macro conditions have further complicated the risk appetite among investors. The recent interest rate hike by the Bank of Japan to 0.75% has contributed to tightened global liquidity and placed additional pressure on risk assets, including cryptocurrencies. While gold and silver have reached all-time highs, U.S. equity markets have faced declines amid concerns regarding valuations of technology stocks related to AI.
In the near term, Bitcoin appears trapped in a consolidation phase. As long as options positioning remains significant, large price movements are unlikely. A potential breakout could occur after December 26 when the pressure from hedging dissipates. Until that time, the market is likely to experience choppy trading conditions, with downside risks limited to recent lows unless liquidation pressures escalate.
