Bitcoin is facing a challenging situation, as it is set to experience a fourth consecutive monthly decline. This trend has not been observed since the period of 2018 to 2019, when the cryptocurrency saw six consecutive months of losses. Currently, Bitcoin is trading around $87,000, reflecting a downturn over the month, even with a week remaining in January.
Historical Context of Bitcoin’s Decline
In the last three months, Bitcoin registered negative monthly closes in October, November, and December. This marks a significant correction from its all-time high achieved in October. Over this timeframe, the cryptocurrency has experienced a decrease of approximately 36% from its peak to its lowest point.
Interestingly, during the 2022 bear market, Bitcoin fell from $69,000 to $15,000, yet it did not record more than three consecutive months of losses. This historical context underlines the peculiar nature of the current market conditions. If January concludes with a loss, it will emphasize how rare this streak truly is.
Short-Term Market Sentiment
Despite the prevailing challenges in spot prices, there are signs of cautious optimism within the derivatives market. Data from Deribit illustrates a slight uptick in options positioning that indicates potential positive sentiment as the month draws to a close.
Important Upcoming Options Expiry
- Bitcoin faces an options expiry on January 30.
- Total open interest at that time is projected to be around $8.5 billion on Deribit.
- The $100,000 call option has the highest notional value, nearly $900 million.
This activity suggests that a notable group of traders may be gearing up for a potential rebound in Bitcoin’s price, particularly targeting the six-figure level. The “max pain” price for this options expiry is approximately $90,000. The max pain price refers to the level at which the majority of options contracts would expire worthless, and it often influences market dynamics as expiration approaches.
