Bitcoin rally loses steam as market braces for expiry of crypto derivatives

Bitcoin and its smaller rivals are struggling for traction, after the largest cryptocurrency surged to a record high last week

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Bitcoin is retreating after hitting a record high earlier this month. Photo: Reuters

Published: 12:15pm, 27 Dec 2024Updated: 2:51pm, 27 Dec 2024

A bitcoin rally is fizzling in the final days of a record-breaking year for the digital asset, as investors assess the remaining impetus from US president-elect Donald Trump’s embrace of the cryptocurrency sector.

The largest token changed hands at US$96,200 as of 2pm Friday in Hong Kong, partly paring a retreat of almost 3 per cent from a day earlier. Smaller rivals including ether and dogecoin, a favourite of the meme crowd, oscillated in tight ranges.

Trump is pushing ahead with a promise to create a crypto-friendly environment in the US and has backed the idea of establishing a national bitcoin reserve. Traders are waiting to see if such a stockpile is feasible.

The crypto market is also braced for the expiry of a substantial quantity of bitcoin and ether options contracts on Friday – one of the biggest such events in the history of digital assets, according to prime broker FalconX.

The notional value of the bitcoin contracts on the Deribit exchange – one of the largest for digital-asset derivatives – exceeds US$14 billion, while the equivalent figure for ether is about US$3.8 billion.

Sean McNulty, director of trading at liquidity provider Arbelos Markets, flagged the risk of a “choppy market” amid the expiry of the derivatives positions.