Cryptocurrency Market Experiences Wild Swings: Bitcoin Plunges Below $96,000, 110,000 Liquidated, $14 Billion in Options Expiring

Cryptocurrency Market Experiences Wild Swings: Bitcoin Plunges Below $96,000, 110,000 Liquidated, $14 Billion in Options ExpiringThe cryptocurrency market has recently undergone dramatic volatility. On Thursday, December 26th, Bitcoin's price briefly plummeted, falling below $96,000 per coin, dragging other major cryptocurrencies down with it

Cryptocurrency Market Experiences Wild Swings: Bitcoin Plunges Below $96,000, 110,000 Liquidated, $14 Billion in Options Expiring

The cryptocurrency market has recently undergone dramatic volatility. On Thursday, December 26th, Bitcoin's price briefly plummeted, falling below $96,000 per coin, dragging other major cryptocurrencies down with it. This followed a surge to over $108,000 last week, which was subsequently reversed with significant price drops in the following days. On Monday, Bitcoin dipped below $92,500, rebounded above $98,000 on Tuesday, briefly even surpassing $99,900 during Thursday's trading before sharply retreating to close at $96,195.8, representing a decline of over 2% in 24 hours.

Coinglass data reveals that over 110,000 users were liquidated in the past 24 hours, with total liquidations reaching $280 million. Bitcoin's sharp decline also impacted other cryptocurrencies, leading to varying degrees of price drops for Ethereum, Dogecoin, Cardano, and others.

Commenting on the cryptocurrency market crash, Bitget's chief analyst, Ryan Lee, attributed the decline primarily to insufficient market liquidity during the Christmas holiday period. He predicts that Bitcoin's price could rebound to over $105,000 once market liquidity recovers after the holiday. He anticipates increased market activity post-Christmas and believes that institutional investment in the crypto industry will remain strong, potentially influenced by the return of Donald Trump.

However, the upcoming expiry of massive Bitcoin options contracts could further exacerbate market fluctuations. This Friday sees the expiration of the largest-ever Bitcoin options contracts, totaling a staggering $14 billion. According to data released by Deribit CEO Luuk Strijers, the ratio of put options to call options is 0.69, meaning there are 7 put options for every 10 call options. Significantly, this expiry represents twice the volume of the March 2025 contracts and accounts for 44% of all open Bitcoin options contracts currently outstanding ($32 billion total). Deribit estimates that over $4 billion in contracts will be exercised, inevitably triggering significant trading activity and market volatility.

Beyond the potential risks associated with options contract expiry, geopolitical factors are also influencing the cryptocurrency market. Reuters reported that on Wednesday, December 25th, Russian Finance Minister Anton Siluanov stated that Russian businesses have begun using Bitcoin and other digital currencies for international payments. Siluanov stated that, "Under the framework of an experimental regime, it is possible to carry out foreign trade transactions using bitcoin mined in Russia." He emphasized the potential of this method, saying that such transactions are already underway and should be expanded. He anticipates further progress next year, viewing the use of digital currencies for international payments as a future trend.

This statement echoes earlier comments made by President Vladimir Putin regarding the US dollar. Earlier this month, Putin claimed that the US government's use of the dollar for political purposes has weakened its position as a reserve currency, pushing many countries towards alternative assets. He cited Bitcoin as an example of such an asset, highlighting its unregulated nature, indirectly expressing support for cryptocurrency. Russia's relaxed stance on cryptocurrencies this year, allowing their use in foreign trade and legalizing cryptocurrency mining, has broadened the scope for cryptocurrency adoption within the country.

However, not all countries share this positive view. Federal Reserve Chairman Jerome Powell stated during a press conference earlier this month that the Fed has no intention of adding Bitcoin to its balance sheet. "We're not permitted to own Bitcoin," Powell said, adding that the Federal Reserve Act dictates what the Fed can own and that it is not seeking a change; this is a matter for Congress to consider, and it is not something the Fed wants to change.

This contrasts sharply with the campaign promises of Donald Trump, who indicated he would list Bitcoin as a strategic reserve asset if he returned to the White House. As his potential return nears, some US states are considering implementing this. Currently, three states have proposed establishing Bitcoin strategic reserves.

Meanwhile, some global institutional investors are increasing their cryptocurrency investments. Australian pension and wealth management firm AMP has become one of the first major superannuation managers in the country to invest in cryptocurrency products, allocating approximately A$27 million ($17.2 million) to Bitcoin futures. AMP senior portfolio manager Steve Flegg stated the fund "took a punt and made a moderate allocation to bitcoin" earlier this year. An AMP spokesperson clarified that the investment was in Bitcoin futures and that there were no plans for further increases. AMPs Chief Investment Officer Anna Shelley said the investment in Bitcoin futures reflected structural changes in the digital asset industry over the past year, including the launch of exchange-traded funds (ETFs) by leading investment managers that directly invest in Bitcoin and Ethereum.

In conclusion, the cryptocurrency market is currently subject to multiple influences, encompassing technical risks like options contract expirations, geopolitical factors, and varying regulatory approaches to cryptocurrencies across different regions. The dramatic price swings and significant liquidations indicate persisting market uncertainty. Future market direction will depend on a combination of factors, including the restoration of market liquidity, the actions of large institutional investors, and adjustments to cryptocurrency regulations by various governments. Investors should closely monitor market developments and exercise caution in their decision-making.

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