Bitfinex analysts have warned that cryptocurrency markets are poised for significant volatility as Bitcoin enters its first real correction since hitting a new record high, while the options market shows signs of heating up.
Bitcoin falls and options interest rises:
Bitcoin's price has fallen nearly 8% from its all-time high of $111,880, after a massive 50% surge in 45 days.
This marks the first major decline since April when it hit a low of $74,501.
Open interest in Bitcoin options reached $49.4 billion (before falling to $39 billion after the May contracts expired), reflecting increased hedging and speculative activity from institutions.
Interest in perpetual futures also rose to near record levels, contributing to the liquidation of leveraged positions.
Reasons for correction:
1. Earn profits:
Metrics such as Relative Unrealized Profit (RUP) indicate that paper profits have reached extreme levels, typically indicating the start of short-term euphoric phases in the market.
Historically, this has occurred on only 16% of Bitcoin's trading days, and is often associated with extreme volatility.
2. Macroeconomic pressures:
The United States unexpectedly reimposed tariffs, dampening investor sentiment and sending Treasury yields to their highest level since 2009.
These factors have affected the liquidity of traditional and digital markets.
Positive developments despite the correction:
Gamestop invested $513 million in Bitcoin.
The US Department of Labor reverses its 2022 decision discouraging the use of cryptocurrencies in retirement plans (401(k)).
The Central Bank of Russia has allowed qualified investors to trade in cryptocurrency-related instruments, enhancing institutional integration.
Expectations:
Although Bitcoin remains structurally strong, and this correction represents a healthy reset after a historic rally, the combination of technical indicators, profit-taking, and economic pressures suggests continued volatility in the near term.
