The price of Bitcoin has been fluctuating around the $90,000 mark amid periods of low trading volume typically associated with holiday markets. These fluctuations have demonstrated sharp increases and decreases but have been characterized by insufficient volume to support a genuine breakout.
As reported, the world’s leading cryptocurrency experienced a modest increase of approximately 2.6% during these low-liquidity conditions, maintaining a position above $86,000 throughout the week. However, it failed to uphold the $90,000 threshold during trading hours in Asia on Monday.
As of Tuesday, Bitcoin was recorded at $87,465, with a 24-hour trading volume nearing $52 billion, indicating minimal change in value over the preceding day.
QCP Capital commented that the current market movement lacks the necessary participation to drive prices significantly higher. In their analysis, they noted a sharp decline in open interest following last Friday’s unprecedented options expiry, which fell by nearly 50%, suggesting that a number of traders have opted to withdraw from active trading.
Options are Affecting Market Positioning
The record options expiry has marked a pivotal moment in market structure. Prior to this event, dealers held long gamma positions; they are now positioned short gamma to the upside, as per QCP’s observations. This situation requires dealers to hedge against rising prices by purchasing Bitcoin or short-dated call options.
This dynamic may intensify price movements and create a feedback loop during periods of Bitcoin price appreciation.
QCP noted a similar trend emerging earlier this month when Bitcoin briefly approached the $90,000 mark. During that time, funding rates escalated rapidly as traders adjusted their positions, contributing to short-term upward pressure.
Following the options expiry, Deribit’s perpetual funding rate surged to over 30% from nearly flat levels previously. Elevated funding rates generally increase the cost linked with maintaining long positions and often indicate the presence of crowded bullish trades.
During the latest attempt to rally, significant transactions were observed in the BTC-2JAN26-94K call option. QCP indicated that a sustained move above $94,000 could further stimulate gamma-driven buying; however, they emphasized that any breakout necessitates enduring demand in the spot market.
Without a meaningful volume, potential upward movements may likely diminish.
The Macro Backdrop is Adding Market Volatility
The recent approaches toward the $90,000 mark coincided with rising oil prices attributed to renewed hostilities directed at energy infrastructure in Russia and Ukraine, which dampened expectations of achieving a near-term peace settlement. The increasing energy prices have exacerbated inflation concerns globally.
While Bitcoin saw an uptick in Asian hours amidst growing geopolitical uncertainty, it subsequently retraced its gains during early hours in the United States.
Long-term advocates continue to advocate for Bitcoin as a safeguard against fiscal imbalances, particularly noting the U.S. national debt, which has surged to approximately $37.65 trillion, based on official figures.
Bitcoin Price has Critical Support at $84,000
A weekly close above $94,000 could potentially set the stage for movement toward $101,000 and ultimately $108,000, although significant resistance is anticipated along the way.
On the downside, the critical support level remains at $84,000. A failure to maintain this level could result in the Bitcoin price declining toward the $72,000–$68,000 range, with further losses possible should it drop below $68,000.
Although short-term liquidity may remain constrained during the ongoing holiday season, substantial options expirations near the $100,000 mark could influence market dynamics.
The current overall sentiment is characterized by caution, according to the analysts, with bulls showing resilience but still requiring further validation.
At the time of this writing, Bitcoin is trading in the vicinity of $87,000. Throughout the Christmas holiday sessions, Bitcoin has oscillated between $86,000 and $90,000.
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