Bitcoin News Today: Bitcoin Plunges Toward 3-Year Low Vs. Gold Amid Record $28B Options expiry Looming

Bitcoin slid toward a three-year low in its ratio to gold as investors braced for a pivotal $28 billion options expiry on Boxing Day, a key driver of market volatility. The expiry could intensify swings in Bitcoin's price, particularly as the token's relative strength index (RSI) approaches oversold territory. Analysts are closely watching whether the expiry will trigger a rebound or extend the downward trend.

The record $28 billion in Bitcoin options set to expire on December 26 will likely amplify trading activity as hedge funds and institutional players adjust their positions. This expiry level is one of the largest in history and could lead to sharp price moves depending on how market participants manage risk. Options expiries often act as liquidity sponges, pulling in capital or forcing unwinding of leveraged bets.

The Federal Reserve's liquidity interventions have also caught the attention of crypto traders. The Fed's recent repo operation injected $6.8 billion into markets, a first since 2020, signaling its readiness to manage year-end funding pressures. Crypto markets typically respond positively to liquidity injections, as easier borrowing conditions support higher-risk assets like Bitcoin.

Market Volatility and the Role of Options Expiry

The massive $28 billion options expiry is a focal point for volatility. Such large expirations often lead to sharp price swings as counterparties settle positions. Traders are watching to see whether the expiry will result in a short-term bounce or further consolidation in the lower range.

Historically, Bitcoin's price tends to stabilize after large options expirations once the immediate pressure of position adjustments subsides. However, the scale of this particular expiry means market participants must factor in a higher degree of uncertainty compared to typical events.

Some traders have already positioned for a potential rebound, betting that the expiry will trigger a short-covering rally. However, others remain cautious, citing the broader macroeconomic environment and the lack of clear bullish catalysts.

Central Bank Policy and Its Crypto Implications

The Federal Reserve's recent liquidity support has added another layer of complexity to Bitcoin's near-term outlook. With the central bank injecting funds into the banking system, traders are weighing whether this will filter through to crypto markets and support risk-on assets.

While the Fed has not hinted at a shift in its restrictive stance, the repo operations underscore its willingness to manage seasonal liquidity strains. For crypto investors, the infusion of capital could temporarily ease funding costs and reduce the pressure to deleverage positions.

A dovish turn in U.S. monetary policy could further benefit Bitcoin, as lower interest rates typically drive capital toward alternative assets. However, investors remain cautious given the Fed's focus on returning inflation to 2% and the potential for prolonged high rates.

What Analysts Are Watching

Analysts are closely monitoring the interplay between the $28 billion options expiry and broader liquidity conditions. The expiry could create a short-term catalyst for price action, but the long-term trajectory of Bitcoin will depend on macroeconomic developments and central bank policy.

Technical indicators suggest Bitcoin is approaching a potential turning point in its relative strength index against gold. A sustained move above key support levels could signal a bullish reversal, while a breakdown could extend the current bearish trend.

Investors are also keeping a close eye on regulatory developments, particularly with a new Federal Reserve chair expected to be named in the coming weeks. Trump's shortlist includes candidates with crypto-friendly stances, which could influence the broader market environment for digital assets.