(Bloomberg) – Bitcoin (BTC-USD) fell nearly 7% in a short period of time, a day after a historic rally to more than $100,000 led some traders to hedge against an exit.
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The digital asset fell as low as $92,144 on Friday, but stabilized at $97,851 as of 6:05 a.m. in London. Volatility has also hit the entire crypto market as the bull market, fueled by President-elect Donald Trump's support for the sector, has paused.
Demand for bearish bets such as put options, which give the right to sell at a predetermined price within a certain period of time, is increasing. The most notable moves were puts with strike prices of $95,000 and $100,000, according to AmberData. Demand for puts in the $75,000 and $70,000 range also increased.
“It feels like there's still room, but I would expect investors to give up some of their gains,” said Josh Gilbert, a market analyst at eToro. “Looking back at previous cycles, it is not uncommon for Bitcoin prices to decline by 20% to 40% during bull markets.”
Bitcoin, the largest digital asset, rose to 10 on Thursday on optimism that President Trump's selection of a crypto advocate as the next head of the U.S. securities regulator will push the market further into the mainstream. It surpassed the million dollar price level.
President Trump has vowed to lift the Biden administration's stranglehold on digital assets and transform the United States into a global home for cryptocurrencies. Republicans even supported the controversial Strategic National Bitcoin Reserve Initiative, which former US Treasury Secretary Lawrence Summers called “insane.”
white house emperor
Late Thursday in the United States, President Trump posted on Truth Social that David Sachs will become the White House czar of the artificial intelligence and cryptocurrency industry. “I will work on a legal framework that will give the crypto industry the transparency it has been seeking and allow it to thrive in the United States,” Trump said.
The president-elect's support for cryptocurrencies has supported sentiment, helped by $33 billion in net inflows into U.S. Bitcoin exchange-traded funds this year. At the same time, the token's 45% rise since voting day on November 5th raises questions about whether the rally should take a breather.
“The spike in volatility over the past 24 hours has the typical characteristics of a soaring ceiling,” IG Australia market analyst Tony Sycamore said. “While we do not believe this is the end of the Bitcoin bull market, it does signal a solid phase in the coming days and weeks.”
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6 digit strike
Elsewhere in the derivatives market, the outlook for 2025 remains optimistic. On Deribit exchanges, the highest open interest for options expiring at the end of January is calls with strike prices of $110,000 and $120,000.
Options trading volume in BlackRock's iShares Bitcoin Trust (IBIT), the token's largest fund, soared to an all-time high on Thursday. More than 400,000 calls changed hands, compared to about 190,000 puts, according to data compiled by Bloomberg.
Some of the most notable strategies traded $51 and $41 puts expiring on January 17th, totaling about 34,000 contracts. A few minutes later, on May 16th, we called at $58 and the modified hand was placed with two opening blocks of 12,000 options at $58.
—With assistance from David Pan and Cecile Vannucci.
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