Illustrative photo
Illustrative photo.

Bitcoin has been trying hard to move sideways between the $ 32,000 and $ 33,000 range over the past several days but has not stopped the decline so far. Accordingly, at 6:30 am on January 28, Bitcoin price on CoinDesk temporarily stood at $ 30,472, sharply down 6.68%, each coin "flew" $ 2,181.

In the last 24-hours Bitcoin's (BTC) price dropped 10% today to test the $30,000 support. This drop below what traders have described as a ‘key’ support occurred just two days ahead of this month’s futures and options expiry.

Despite the record-high $4 billion options expiry being just two days away, both bull and bear sides traded similar sizes today.

Unlike futures contracts, options are divided into two segments. Call (buy) options allow the buyer to acquire BTC at a fixed price on the expiry date. On the other hand, the seller of the instrument will be obliged to make the BTC sale. Generally speaking, they are used on either neutral arbitrage trades or bullish strategies.

The put (sell) options are commonly used as hedge, protection from negative price swings.

*Also Read: Top 10 Crytocurrencies To Buy In 2021 - Pros and Cons of each Investment

To understand how these competing forces are balanced, one should compare the calls and put options size at each expiry price (strike). Options markets are all-or-none, meaning they either have value or become worthless if trading above the call strike price, or the opposite for put option holders, CoinTelegraph reported.

The trading volume over the past 24-hours has favored the more bullish call options by 51%. Nevertheless, this number is polluted by the ultra bullish strikes priced at $37,000 and higher. Considering there's less than 36 hours before the expiry, these contracts are trading below $50 each.

Excluding these over-optimistic strikes, today's trading added another $95 million worth of call options open interest below $35,000. On the other hand, the more bearish put options at $27,000 and higher amount to $90 million worth of open interest.

The result of today's activity has been neutral for Friday's options expiry. Nevertheless, one should check the overall open interest imbalance separate from today's movement.

Notably, the unforeseen decline in Bitcoin's price has resulted in major cryptocurrencies and small market cap digital assets starting to move down:

Specifically, Ethereum dropped 7.76% to $ 1,245, market capitalization recorded at $ 142.3 billion.

Polkadot fell 9.3% to $ 15.4, the capitalization recorded at $ 13.9 billion, transaction volume reached $ 2.9 billion.

Ripple fell 6% to $ 0.251, pulling the market cap down to $ 11.4 billion, transactions reaching $ 2.9 billion.

Similarly, Cardano down 9.7%, Chainlink down 8.5%, Litecoin down 8.3%, Bitcoin Cash down 11% ...

The market was damaged so badly that total capitalization decreased by 7.3% to 896 billion USD, equivalent to 45 billion USD was blown away.

BTC’s Bull Have Impressive Gain With A 900% Surge?

Should the retracement indeed end, further Glassnode data sees impressive gains hidden behind the corner for Bitcoin, according to the Net Unrealized Profit/Loss (NUPL) metric.

By exploring the price when a UTXO (unspent transaction output) was created versus the current price of an asset, NUPL determines if the coins within that UTXO are in a state of an unrealized profit or loss.

Trend: Pullback expected
Trend: Pullback expected

In other words, the metric looks at the difference between unrealized profit and unrealized loss to conclude whether the network as a whole is currently in a state of profit or loss.

Glassnode measures it with -2 being the most significant level of a loss, to +1 representing a “euphoria” zone where almost all positions are in a state of an unrealized profit. The analytics company has asserted that if the metric goes above 0.75, it enters the so-called euphoria, typically followed by a sharp retracement.

BTC’s Correction To Finish Soon?

Following a substantial price increase that led to a new all-time high in early January, the primary cryptocurrency hit a wall and currently struggles with the $30,000 psychological line.

This more than $10,000 price decline raised discussions if this bull cycle has ended and BTC is heading for a prolonged correction, similarly to the bear market in 2018 after the previous ATH.

However, Glassnode data suggests the opposite. The Spent Output Profit Ratio, dividing the realized value (in USD) by the value at creation of a spent output, is typically used to outline the state of a BTC correction during a bull run.

Following the recent steep decline, the metric has dropped to near neutral levels, which hints that the retracement is almost finished.

* For more updates and predictions of daily bitcoin and other cryptocurrencies prices, please click here!

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