Bitcoin Lull Could Spur Altcoin Rally, With $90K Considered ‘Attractive’ Buying Area

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What to know:

  • Traders expect bitcoin (BTC) choppiness to continue with a possible rotation to altcoins.
  • Bitcoin is currently going through one of its worst December months so far, dampening a seasonally bullish period with a 2% drop over the past 30 days.
  • But a drop to the $90,000 level could spell renewed opportunity for market traders.

As a seasoned crypto investor with a few battles under my belt, I’ve learned to navigate the cryptocurrency market’s turbulent waters with a mix of patience, strategy, and a good dose of humor. After all, it’s not called “crypto-rollercoaster” for nothing!

In simpler terms, traders believe that Bitcoin’s price volatility will persist and there might be a shift towards other cryptocurrencies (altcoins), due to an important event affecting option contracts, which could influence market trends during the upcoming holiday season.

On Friday, there’s significant attention focused on an expiration event with nearly $20 billion in combined Bitcoin and Ethereum options set to settle. This amount is almost half of the total open interest on Deribit, according to Singapore-based QCP Capital, who made this statement early Tuesday. They predict it could happen, especially if the spot market maintains its current range and option sellers continue extending their short positions.

Instead of allowing their trades to end, traders may adjust their positions to future expiration dates, a strategy known as “extending” or “rolling over.” They do this when they continue to have faith in their market predictions and wish to maintain their trade active for a longer period.

A high level of volatility might benefit option purchasers, as it enhances the likelihood that the option becomes “worth exercising” (profit-making) prior to expiration, thus generating profits for them.

If Bitcoin (BTC) remains stuck below $100k, we might witness alternative cryptocurrencies (alts) picking up speed again,” QCP stated, mentioning that a similar pattern occurred last month when bitcoin was trading at its current price point. Notably, the ether-to-bitcoin ratio found support at 0.032 and rebounded, leading to increased activity in altcoins, as previously reported.

In the crypto world, Bitcoin typically takes the initial plunge as markets experience recurring cycles. This movement is often followed by other digital currencies, or altcoins. Investors who have recently reaped profits from the market look for further returns, causing a surge of capital towards altcoins. Consequently, these altcoins exhibit dramatic price increases in relatively brief timeframes.

At the moment, Bitcoin is experiencing one of its least favorable Decembers on record, which has weakened an otherwise optimistic period due to a 2% decrease over the past month. The anticipation for a “Santa rally” – a common occurrence where the asset typically rises during the holiday season – has been diminished by investors cashing out and a general sense of apprehension following a series of price fluctuations.

Some are expressing concern about potential future decreases, as the U.S. Federal Reserve suggested less interest rate reductions for the upcoming year, while emphasizing that they do not allow state-level Bitcoin holdings and have no intention of altering laws to permit it.

However, a fall to the $90,000 mark might open up fresh prospects for market traders, as suggested by Alex Kuptsikevich in an email to CoinDesk.

In a possible unexpected drop, Bitcoin might plummet towards the $70,000 mark. Nevertheless, it’s more likely that a retreat to around $90,000 over the next fortnight could be enticing enough for buyers to halt the downward trend, according to Kuptsikevich. The markets are currently processing the Fed’s firmer stance, which is further strengthened by the desire to secure profits following a robust year.

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2024-12-24 08:23