Bitcoin Faces Correction Risks Amid High Leverage, Warns Expert

The distribution of implied volatility in the bitcoin options market suggests a high probability of trading at lower levels, according to experts from Blofin, as reported by CoinDesk.

“Traders have reached an implicit consensus that prices for the leading cryptocurrency and altcoins are still high, and a pullback is possible,” commented the specialists.

Blofin noted that a similar situation was observed in derivatives of Trump Media & Technology shares before their prices halved in just over two weeks.

Comments from Jerome Powell, head of the Fed, do little to inspire optimism. He emphasized the lack of urgency in cutting rates at the December meeting.

Analysts at QCP Capital have also adopted a more cautious outlook, while still hoping for a range of $100,000-120,000 amid speculation about Donald Trump creating a bitcoin reserve.

They noted the sale of calls and purchase of puts by major players for hedging risks. Experts also highlighted the active growth of leverage, especially in altcoins, reflected in rising funding rates.

“The risk of deleveraging could be quite significant,” warned the specialists.

XRP’s Hour

Among altcoins, XRP stood out with a 17.6% surge in the last 24 hours. Over seven days, the coin’s price increased by 54.2%.

The asset shows the greatest sensitivity to news about the potential departure of Gary Gensler from his position as head of the SEC amid a long-standing legal battle between the fintech company and the regulator. 

The trigger was an official statement in which many saw preparations for such a scenario.

On the same day, attorneys general from 18 US states filed a collective lawsuit against the agency and its commissioners, accusing them of unconstitutional overreach and unfair persecution of the digital asset industry.

Earlier, Bernstein urged investors to “add crypto assets to their portfolios as soon as possible.” They recommended acquiring a basket of digital assets, including BTC, ETH, SOL, OP, ARB, POL, UNI, AAVE, and LINK.

Previously, Glassnode noted that bitcoin has not reached levels for hodlers to take profits.