The crypto market suddenly retreated during the US session, erasing gains made earlier in the day as investors awaited the expiration of the biggest option of the year.
Summary
- The crypto market suddenly retreated as traders waited for options to expire.
- Bitcoin and Ethereum options worth over $28 billion will expire today, December 26.
- Technical analysis of BTC indicates a possible bearish breakout.
Crypto market prepares for $28 billion options expiration
Bitcoin (BTC) price fell below $87,000, down from the intraday high of $89,000. Likewise, Binance Coin (BNB), Dogecoin (DOGE), and Canton fell by more than 3% in the last 24 hours.
The decline reflected activity in the U.S. stock market, where the blue-chip Dow Jones index fell 70 basis points. Stocks and the crypto market saw low trading volume as many traders remained on vacation.
The next major crypto news will come later as the sector experiences the biggest options expiration of the year. Bitcoin options worth over $23 billion and Ethereum options worth over $4 billion will expire on Deribit.
Bitcoin options have a put-call ratio of 0.38, indicating a bullish trend, with calls outnumbering puts. The main bullish concentrations are between $100,000 and $116,000, with the maximum pain point being $96,000. The maximum pain point is a level where most options expire worthless.
Meanwhile, 1.28 million Ethereum (ETH) options worth over $4 billion will expire at the same time. The put-call ratio is between 0.43 and 0.45, indicating a bullish bias. Its main strike concentration is between $3,000 and $3,100, with the maximum pain point being $3,000.
The crypto market often experiences higher volatility before and after major options expire. This volatility will be amplified by the fact that the volume of the cryptocurrency sector remains low, and more and more users are on vacation.
Bitcoin Price Action Indicates More Cryptocurrency Issues
The three-day chart shows that Bitcoin price remains under pressure and has formed numerous downtrends that could lead to more declines in the near term.
Bitcoin has formed a rising wedge pattern, characterized by two converging ascending trendlines. The coin has also formed a bearish pennant pattern, consisting of a vertical line and a symmetrical triangle.
It is also poised to form a death cross as the gap between the 50-day and 200-day weighted moving averages narrows. Therefore, the coin is likely to fall, potentially to the November low of $80,000. A move below this level would indicate further decline, potentially to $75,000.
