High volatility benefits option buyers by increasing the likelihood that their options will become “in-the-money” (profitable) before expiry, offering greater potential for returns.
Traders predict continued volatility for Bitcoin (BTC) as a major options expiry looms, potentially shifting focus to altcoins in the festive week ahead.
“This Friday’s massive options expiry, with nearly $20 billion notional in BTC and ETH options, represents nearly half the open interest on Deribit,” noted Singapore-based QCP Capital. They suggested the market could remain choppy, especially if spot prices continue to range and option sellers roll their short positions forward to later expirations. This practice, known as “rolling,” keeps trades active for those holding to their forecasts.
High volatility often benefits option buyers, increasing the likelihood of profitability before expiration. QCP also pointed out that if Bitcoin struggles to break above $100K, altcoins could “play catch-up,” as seen a month ago when Bitcoin traded at similar levels. During that period, the ether/bitcoin ratio rebounded from 0.032 support, spurring altcoin momentum.
The crypto market often cycles from Bitcoin-led rallies to altcoin surges, driven by capital rotation from investors seeking additional returns. However, Bitcoin’s 2% drop over the past month has disrupted its usual December bullish trend, with hopes of a “Santa rally” dampened by profit-taking and cautious sentiment after recent gains.
Further declines are possible, influenced by the Federal Reserve’s hawkish stance on rate cuts and regulatory resistance to BTC holdings. Despite this, FxPro’s Alex Kuptsikevich sees opportunity at $90K. “A pullback to $90K in the coming weeks could attract buyers and halt the sell-off,” he stated, though he acknowledged a more extreme scenario where prices briefly dip to $70K. Market dynamics are adjusting to the Fed’s tone and profit-locking behavior after a strong year.
