Bitcoin’s Major Options Earthquake Is Now Behind Us: So What Lies Ahead in Terms of Price?

A new analysis of the cryptocurrency markets suggests that the pressure on Bitcoin stemming from derivative products has largely ended, and the price discovery mechanism has been reactivated.

According to the analysis, the pullbacks seen in recent weeks have been consistently met with buying demand, and the preservation of previous lows indicates that the market structure generally presents a constructive outlook.

An analysis written by Negentropic, a co-founder of Glassnode, states that a significant structural change is occurring in Bitcoin’s price structure. According to the analysis, the “balancing effect” created by derivative markets has largely disappeared. With the approach of the largest Bitcoin option expiry in history, with a nominal value of approximately $23.6 billion, the price pressure seen in previous weeks due to hedging activities is said to be coming to an end.

The analysis noted that rallies seen prior to option expirations were often suppressed by mechanical hedging transactions rather than true supply and demand dynamics. With the withdrawal of these funds from the market, the Bitcoin price is no longer under this kind of “stabilization” effect; the price structure will once again be determined by market dynamics, and the price discovery process has returned. This process is expected to strengthen the upward trend over time.

On the macroeconomic front, liquidity conditions continued to improve. The US M2 money supply rose 4.3% year-on-year in November to a record high of $22.3 trillion, marking its 21st consecutive month of expansion. This level is approximately $400 billion above the 2022 peak. The inflation-adjusted real M2 money supply also increased by 1.5% year-on-year, continuing its upward trend for the 15th month.

The assessment stated that the long-term trend is clear and that the dilution in fiat currencies continues, while macroeconomic and structural factors continue to create a new and more favorable environment for Bitcoin.

*This is not investment advice.