Bitcoin Price Stagnation May Lead to Altcoin Rally as $90K Target Emerges
Traders anticipate ongoing volatility in bitcoin (BTC) with a potential shift towards altcoins due to a significant options expiry impacting market dynamics this week.
QCP Capital from Singapore noted that nearly $20 billion in notional value across BTC and ETH options will expire this Friday, constituting almost half of the total open interest on Deribit. They suggested that if spot prices remain stable, option sellers might roll their positions forward rather than allowing them to expire.
"Rolling" involves traders adjusting their options to later expiration dates to maintain active trades based on their market outlook. High volatility is beneficial for option buyers as it increases the likelihood of options becoming profitable before expiry.
As BTC struggles below $100,000, QCP indicated that altcoins may begin to catch up, similar to trends observed previously when BTC traded at current levels. The ether/bitcoin ratio rebounded from a support level, prompting movement in altcoins.
The crypto market typically experiences cycles where bitcoin leads followed by altcoin rallies as investors seek additional returns. This capital flow can result in rapid price increases for altcoins.
Currently, bitcoin is facing one of its poorest Decembers, with a 2% decline over the past 30 days, undermining expectations for a "Santa rally." Profit-taking and caution after recent price increases have tempered festive week hopes.
Some experts warn of further declines following signals from the U.S. Federal Reserve regarding fewer rate cuts next year and its stance against state holdings of BTC. A fall to the $90,000 level might present new trading opportunities, according to FxPro’s Alex Kuptsikevich, who mentioned the possibility of a sharper drop to the $70,000 area but believes a pullback to $90,000 could attract buyers and halt the sell-off.