cryptonewsz.com
In the recent days, due to holiday season, the trading volumes have decreased in the cryptocurrency market, and the market is experiencing a heightened volatility. The situation is expected to intensify with the expiration of $17.8 billion in Bitcoin (BTC) and Ethereum (ETH) options contracts tomorrow.
The situation was highlighted by a well-know crypto-influencer Ashcrypto (@Ashcryptoreal) on X. According to the tweet, this event could also give rise to sharp price fluctuations, which could create opportunities or risks for the traders.
What Does This Mean for the Market?
Option contracts are tools that allow traders to buy or sell an assets at a predetermined price before a specific date. When these contracts expire, traders adjust their positions, leading to increased volatility. With both BTC and ETH accounting for the bulk of the crypto market, the expiration of this huge volume will have a significant effect on the other cryptocurrencies as well. With this post on X, the community is currently experiencing a FUD situation.
Potential Scenarios
The market reactions will mostly depend on whether the majority of expiration options are bullish (calls) or bearish (puts). A call-heavy as traders race to buy assets, while put-dominated scenario might pressure prices downward. Whatever the outcome may be, the result will set the tone for the market moving into the new year.
How Can Traders Prepare for the Bitcoin and Ethereum Options Expiry?
For short-term traders, identifying key support and resistance levels will be crucial. The on-chain data, large wallet movements will have to be monitored which will provide clues about market direction.
For long-term investors, they may use this opportunity to assess their portfolio and consider dollar cost averaging strategies if prices dip significantly.
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