BTC Price Analysis: $9.4B Options Expiry Looms as Bitcoin Tests Support Levels

TLDR

• Bitcoin experienced a 4% drop to $92,785, marking the largest single-day decline since Trump’s election victory
• Trump’s announcement of new tariffs on imports from China, Mexico, and Canada triggered market uncertainty
• $9.4 billion in Bitcoin options are set to expire on Friday, potentially causing increased volatility
• Core PCE inflation data release on Wednesday could influence Federal Reserve’s interest rate decisions
• Despite the dip, major players like MicroStrategy continue accumulating BTC, purchasing 55,000 Bitcoin

Bitcoin experienced a notable price decline on Tuesday, dropping below $93,000 amid several market-moving events. The cryptocurrency hit an intraday low of $92,785, representing a 4% decrease from previous levels, marking the largest single-day decline since Donald Trump’s election victory.

The price movement came as a direct response to President-elect Donald Trump’s announcement of additional tariffs on imports from China, Mexico, and Canada. The news sent ripples through both traditional and cryptocurrency markets, with US equity futures showing immediate negative reactions to the trade policy developments.

Trading volume surged dramatically during this period, climbing 60% to reach $84.84 billion. This increase in volume suggests heightened market activity as traders and investors adjusted their positions in response to the changing market conditions. As of press time, Bitcoin trades at $94,512, showing some recovery from the day’s earlier lows.

The cryptocurrency market’s reaction aligned with broader financial market movements, as the US Dollar Index jumped 0.7% following Trump’s announcement. This correlation demonstrates Bitcoin’s increasing connection to traditional market dynamics and global economic events.

Kieran Calder, head of equity research for Asia at Union Bancaire Privee, provided context to Trump’s approach, stating,

“This is President Trump’s negotiating style: step one, punch in the face, step two, let’s negotiate.”

The market’s response suggests investors are factoring in potential economic implications of these new trade policies.

Adding another layer of complexity to the market dynamics, a substantial amount of Bitcoin options are set to expire this Friday. The total value of these options stands at $9.4 billion, with current data from Deribit showing a put/call ratio of 0.83. The maximum pain point for these options sits at $78,000, suggesting possible price volatility in the coming days.

The options market structure shows concentrated interest at specific price levels. Most open interest focuses on call options at the $82,000 strike price and put options at the $70,000 strike price. According to max pain theory, prices could move toward the $70,000-$82,000 range as expiration approaches.

Bitcoin Price on CoinGecko

Market participants are also closely watching the upcoming core PCE (Personal Consumption Expenditures) data release on Wednesday. This inflation indicator could influence Federal Reserve policy decisions and, by extension, impact both traditional and cryptocurrency markets.

Chris Weston, an analyst at Pepperstone, notes that higher core PCE numbers might reduce expectations for a December rate cut. This scenario could affect market dynamics across various asset classes, including cryptocurrencies.

Despite the price decline, institutional interest in Bitcoin remains robust. MicroStrategy made headlines by purchasing 55,000 Bitcoin, demonstrating continued confidence in the cryptocurrency’s long-term prospects. This move prompted Bernstein analysts to raise their stock target for MSTR to over $600.

Popular crypto analyst CrediBULL Crypto advises caution regarding new long positions following the break below $94,000. The analyst suggests that while the price could potentially reach $80,000, such a move would not occur immediately.

Well that is local inval officially hit- which means our LTF impulse from 94k was just part of a 3 legged corrective move up rather than continuation of the next major impulse to our upper targets.

Stopped out of my BTC long and won't take another position until I get more… https://t.co/mFqcrnnf1b pic.twitter.com/28O774bn3r

— CrediBULL Crypto (@CredibleCrypto) November 25, 2024

Another notable perspective comes from analyst Joe Consorti, who identified a correlation between Bitcoin’s price movements and global M2 money supply trends since September 2023. This relationship shows approximately a 70-day lag in price movements.

The cryptocurrency’s daily trading patterns show increased volatility, with the options market’s daily trading volume increasing by 124% to $4.47 billion. The open interest in Bitcoin options has also risen by 2% to $42.6 billion, indicating active market participation.

In related developments, the incoming Trump administration has announced plans to establish a crypto advisory council operating from the White House. This council will work on strategic Bitcoin reserve policy, potentially adding a new dimension to governmental oversight of digital assets.

Market analyst Tony Sycamore from IG Australia Pty Market characterizes the recent price movement as “a much needed pullback to work off overbought readings, rather than a reversal lower or anything sinister.” He adds that this serves as a reminder that markets don’t move in straight lines indefinitely.

Semler Scientific has joined the institutional buying trend, announcing a fresh Bitcoin purchase yesterday, adding to the growing list of companies holding Bitcoin on their balance sheets.