With BTC price dropping as low as $ 47,136, a 10% loss in the past 3 days, the anticipation of a New Years rally seems to be fading. A slide below the $ 50,000 support triggered a sell order, followed by a further decline below the $ 48,000 support. Worse still, Bitcoin is currently trading at $ 46,892 at the time of writing.

Source: Tradingview

Before the 124,700 options expire on Friday, the recent drop below $ 47,000 could move the leading asset either way.

Options market heats up

The total trading volume of Bitcoin and ETH options increased + 443% in 2021 to $ 387 billion on December 27th. Last year, BTC and ETH options had a total trading volume of more than $ 71 billion.

BTC options trading volume | Source: Coinglass

Just last week, open interest soared about $ 2.5 billion, largely due to traders on Binance. While futures open interest is still far from all-time highs, rapidly increasing leverage can point to clusters of stop-losses and liquidations near current prices.

Glassnode data shows that such an increase in leverage increases the likelihood of a possible short or squeeze long in the short term.

Bitcoin Futures Open Interest | The source: Glass knot

The trading volume usually decreases towards the end of the year. On a 7-day average, the volume of the futures market has fallen by 16% since the beginning of the year. Lower volumes and increased open interest on a centralized exchange are a combination that will favor at least one local leverage squeeze in the coming weeks.

With the BTC leverage at ATH, there is the option of a correction to eliminate the excess if the price goes down.

Estimated leverage of all exchanges | The source: KryptoQuant

HODLers are still “immobile”

Historically, the market suffered a 32% loss of the $ 29,000 supply in July, while 26% of the BTC supply is currently in the red. However, some long-term owners haven’t touched BTC in more than 5 years, with over 23% of the 21 million BTC on offer still not being moved during that period.

Although the price has fallen nearly $ 20,000 (or -24.4% since ATH) in the past few weeks, long-term owners have only trimmed their BTC positions slightly. The offer held by investors only fell from 13.4 million to 13.3 million, a small change compared to the sharp drop in prices.

Complete range of long-term owners | Source: Glassnode

Analyst Rekt Capital highlighted Bitcoin’s return to the 21-week EMA, which saw the price decline. Historically, BTC has made bearish wicks in the orange zone during a red retest so it is likely to slide back towards $ 44,000 unless the 21-week EMA is set as support next time.

If it re-tests the range between $ 40,000 and $ 42,000 it could hit a local low in the medium term, but now that year-end options expire and there is the possibility of leverage, prices could drop to lower lows in the near future.

Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews

Follow the Youtube Channel | Subscribe to telegram channel | Follow the Facebook page