Bitcoin falls below $100,000, how far will it drop?

Options traders bet on put options in the $80,000 range

"Mega whales holding over 1,000 coins sold; no buying followed"

Bitcoin fell as much as 7.4% the previous day, dropping below the $100,000 mark for the first time since June. This is a decline of more than 20% from the peak recorded a month ago. Market participants said this downturn, unlike the fall in last October's flash crash, is not likely to be a one-off and could fall further to the low $90,000s or the mid-$80,000s.

According to Bloomberg on the 5th (local time), Bitcoin rebounded early that morning in the New York market to $101,269, up 1.7%, but some options investors expect further declines.

Some experts pointed out that while October's 'flash crash' decline was due to forced selling, the current downturn may reflect a more serious situation of weakened conviction.

According to Markus Thielen, head of 10x Research, long-term holders sold about 400,000 bitcoins over the past month. That amounts to about $45 billion. The market has become unstable due to long-term holders' selling.

K33's head of research, Bett Lunde, said, "More than 319,000 bitcoins were reactivated last month, mainly among coins held for six to 12 months." He explained, "Some reactivation came from internal transfers, but a significant portion reflects actual selling pressure."

Unlike the cascade of liquidations that triggered October's crash, the current decline is being driven by steady selling in the spot market. Previously, sudden sell-offs in the crypto market were typically caused by liquidations in the derivatives market rather than the spot market, which generated abrupt volatility.

According to CoinGlass, about $2 billion worth of crypto positions were liquidated over the past 24 hours. This is minimal compared with the $19 billion of forced liquidations during last month's crash. Bitcoin futures open interest remains low, and options traders are betting on declines via put option contracts targeting $80,000.

Because leverage is relatively low, attention is focused on the selling decisions of long-term holders.

Thielen of 10x Research said that as the imbalance between long-term holders selling Bitcoin and new buyers grows, market direction is beginning to form.

He said that 'mega whales' holding between 1,000 and 10,000 bitcoins began unloading large sell volumes this year. This explains why Bitcoin's price traded sideways with volatility over the summer. He also pointed out that overall demand weakened after the October 10 flash crash.

He said the cumulative holdings of people holding between 100 and 1,000 bitcoins have decreased sharply. He said, "The whales are not buying at all." He warned that this downturn could continue until next spring. Thielen said, "During the 2021–2022 bear market, more than 1 million bitcoins were sold in large volumes over nearly a year, and this scale of selling could be repeated."

He does not anticipate a catastrophic crash but sees room for further decline. He said he expects the downside to be $85,000.

There are also views that expect a more gradual correction.

Katie Stockton, founder and managing partner of Fairlead Strategies, said that Bitcoin's break below the 200-day moving average earlier this week suggested the possibility of additional short-term declines. According to her technical analysis, Bitcoin's next stable support level is expected to be around $94,200.

Guest reporter Jeong-A Kim kja@hankyung.com