• Bitcoin's recent fall from a record high of $99,830 to $91,377.32 has sparked market uncertainty.
• Nick Forster of Derive noted a shift in market sentiment, with traders hedging against potential downside risks.
• Bitcoin could potentially move 16.03% lower to $81,493 or 19.9% higher to $115,579 by December 27, according to Forster.
• The recent decline in Bitcoin's value is attributed to profit-taking by long-term holders, distributing $60 billion worth of supply in the last 30 days.

Bitcoin, the world's largest cryptocurrency, has been at the forefront of the digital asset revolution. However, recent trading activity suggests a significant downward shift after Bitcoin failed to breach the much-anticipated $100,000 mark. On November 22, 2024, Bitcoin reached a record high of $99,830. However, the euphoria was short-lived as the cryptocurrency fell more than 8% to a one-week low of $91,377.32 on Tuesday. Despite this setback, Bitcoin has had an impressive run this year, soaring 120% and about 34% this month alone.

This surge in Bitcoin's value can be attributed to several factors, including the election of Donald Trump as U.S. president and the influx of pro-crypto lawmakers in Congress. Trump's campaign was marked by a strong embrace of digital assets, with promises to transform the United States into the crypto capital of the planet and to accumulate a national stockpile of Bitcoin.

Nick Forster, founder of onchain options decentralized protocol Derive, which boasts a total trade volume of $7.1 billion, noted a significant shift in market sentiment. The so-called call-put skew index for the upcoming December 27 Bitcoin expiry showed a 30% drop in the last 24 hours. This index reflects the difference in implied volatility between calls (options to buy) and puts (options to sell).

Market Anticipates Significant Movements

Forster explained, It suggests traders are hedging against potential downside risks, likely in response to Bitcoin's sharp fall. However, he also noted that such pullbacks are not uncommon in bull markets. Investors are now eyeing December 27, when $11.8 billion in Bitcoin options are set to expire, potentially triggering major market movements.

According to Forster, there is a 68% chance of Bitcoin moving 16.03% lower to $81,493 or 19.9% higher to $115,579 by December 27. However, there is also a smaller probability of about 5% of Bitcoin making bigger moves -- a 29.49% fall to $68,429 or a 41.83% surge to $137,645 by the same date.

Interestingly, Derive data also showed higher odds of 45% of Bitcoin hitting $100,000, up from last week's 34%, with a new 4% probability of surpassing $150,000. Forster also noted stability in Bitcoin's volatility in the last seven days, with the seven-day at the money implied volatility at 63% and the 30-day level at 55%.

Profit-Taking Leads to Bitcoin's Decline

Bitcoin's recent decline from its high perch has been attributed to profit-taking by market participants. Anthony Pompliano, founder and CEO at Professional Capital Management, cited analysis from checkonchain.com, which noted that long-term holders have distributed $60 billion worth of supply in the last 30 days.

Of the long-term holders' supply moved since Bitcoin's bottom of $15,479 hit during the FTX collapse two years ago, 21% of it has happened in November. This is the heaviest profit-taking we have seen so far this cycle, according to a post of _checkonchain.com.