Bitcoin News Today: Bitcoin's Plunge: Correction or Collapse as Options and ETFs Fuel $75K Test?

Bitcoin's Sudden Volatility Jump Signals Options Could Be Calling The Shots-Analyst

Bitcoin (BTC) plunged below $84,000 on Friday, marking a sharp decline amid surging macroeconomic uncertainty and risk-off sentiment. The drop, which saw intraday lows hit $82,000, has intensified scrutiny over the role of options activity in driving short-term volatility. Analysts are now pointing to the growing dominance of put options-bets on further price declines-as a potential catalyst for the sell-off, with Deribit data showing aggressive hedging activity at the $75,000 strike price.

The selloff has been exacerbated by record outflows from U.S.-listed Bitcoin ETFs. According to SoSoValue, spot Bitcoin ETFs recorded $903 million in outflows on Thursday, the largest since November 13. This trend reflects waning risk appetite, particularly among institutional investors, as the market braces for the Federal Reserve's December policy meeting. Ethereum (ETH) ETFs fared similarly, with $262 million in outflows, while XRP ETFs bucked the trend with $118 million in inflows. Cumulatively, Bitcoin ETFs have seen net inflows of $57.4 billion since their launch, but recent outflows highlight growing caution.

The options market has amplified these pressures. Put options now dominate trading activity, with the $75,000 strike becoming a focal point for traders hedging downside risks. This surge in bearish positioning aligns with broader market jitters, as volatility indexes hit one-month highs. Analysts note that options expirations and large open interest levels could exacerbate price swings, particularly if the Fed signals prolonged tightening or delays rate cuts.

Macroeconomic headwinds remain a key concern. The Fed's internal divisions over December rate cuts-highlighted by contrasting statements from New York Fed President John Williams and Boston Fed President Susan Collins-have left investors in limbo. Meanwhile, weak retail demand and thin liquidity in crypto derivatives markets have made rebounds fragile. XRP's futures open interest, for instance, fell to $3.57 billion, a decline of $220 million in a single day.

The sell-off has also spilled into altcoins. Ethereum dropped below $2,700, XRP fell 4.5%, and Binance Coin (BNB) lost 5.8%. These declines underscore a broader risk-averse environment, with investors shifting to safer assets amid geopolitical tensions and AI-driven market uncertainty.

Bitcoin's trajectory now hinges on whether the current outflows are a temporary correction or a deeper structural reset. Deutsche Bank analysts warned that the recent 35% drop from October peaks reflects fragile market conditions, including fading regulatory momentum and thin liquidity. If the trend persists, prices could test $75,000, a level last seen during the 2022 crypto slump.