Recently, the volatility of cryptocurrencies has increased!
Last week, Bitcoin briefly broke through $108000 before plummeting sharply in the following days. On Monday of this week, the price of Bitcoin dropped to a low of 92500 US dollars, then rebounded to above 98000 US dollars on Tuesday, and briefly rose to 99900 US dollars during trading on Thursday. However, as of the time of press, Bitcoin has fallen below 97000 US dollars, a drop of nearly 2% within 24 hours.
Under the volatile prices, many people have liquidated their positions. According to Coinglass data, in the past 24 hours, there have been over 100000 cryptocurrency liquidation cases across the entire network, with a total liquidation amount exceeding 240 million US dollars.
It is worth noting that this Friday, the largest Bitcoin option contract in history is about to expire, with a total value of $14 billion, which may trigger severe fluctuations in the cryptocurrency market.
At the same time, there have been several big news reports in the cryptocurrency industry. Russian Finance Minister Siluanov stated on the 25th that Russian companies have started using Bitcoin and other digital currencies in international payments. In the United States, three states have proposed the establishment of a Bitcoin strategic reserve.
The United States is the country with the highest government holdings of Bitcoin. As of December 11th, the US government holds approximately 200000 bitcoins (about $20 billion).
Over 100000 people liquidated their positions
The highly speculative cryptocurrency market has seen many people liquidate their positions. According to Coinglass data, in the past 24 hours, the number of cryptocurrency liquidation cases across the entire network reached 103600, with a total liquidation amount of 247 million US dollars. Among them, multiple liquidation cases amounted to 178 million yuan, and short liquidation cases exceeded 69 million yuan.
Since December, the volatility of cryptocurrencies led by Bitcoin has significantly increased. On December 18th, Bitcoin broke through $108000 for the first time, setting a new historical high; On December 19th, Bitcoin entered a high diving mode and fell below $100000 during trading that day; On December 20th, Bitcoin continued to plummet, falling below $93000 during trading. As of around 21:00 on the 20th, over 420000 cryptocurrency positions were liquidated on the entire network within 24 hours, with a total liquidation amount of $1.4 billion. In the following days, the price of Bitcoin continued to fluctuate widely between $92500 and $99900, during which many people liquidated their positions.
This Friday, the largest Bitcoin option contract in history is about to expire, with a total value of $14 billion, which may trigger severe market volatility. According to data released by Deribit Exchange CEO Luuk Strijers, the ratio of put options to call options for this expiring contract is 0.69, meaning that every 10 call options correspond to 7 put options. Meanwhile, the number of contracts expiring this time is twice the number of contracts expiring in March 2025.
Strijers further explained that this expiring contract accounts for 44% of the total outstanding Bitcoin options contracts (totaling $32 billion). Deribit Exchange expects over $4 billion of contracts to expire and be executed, which is bound to trigger a significant amount of trading activity. Deribit's Volatility Index (DVOL) has been experiencing significant fluctuations recently, which Strijers pointed out means that traders still have significant disagreements about the market's future trends.
David Lawant, head of research at crypto broker FalconX, wrote in a report that short-term price volatility is still the most likely scenario until a "bullish trajectory" appears in the first quarter of 2025. Sean McNulty, head of trading at liquidity provider Arbelos Markets, believes that "bulls should maintain the price of Bitcoin at $90000 until the end of the year, but if it falls below that level, it may trigger further liquidation
Cryptocurrencies have always been considered high-risk assets and subject to strict scrutiny by regulatory agencies, but this situation has recently changed in the United States. As Wall Street institutions increasingly value cryptocurrencies, US regulatory agencies have approved cryptocurrency funds, increasing their mainstream appeal. Since its listing on January 11th this year, the Bitcoin ETF has been highly sought after by investors. As of now, its net inflow of funds has exceeded $35 billion, and its holdings of Bitcoin are worth over $110 billion, accounting for 5.71% of the total circulation of Bitcoin.
However, on Tuesday of this week, the most popular Bitcoin ETF among investors, BlackRock IBIT, recorded its largest single day outflow ever, reaching $188.7 million, surpassing its record high of $72.2 million set on December 20th. Meanwhile, the Bitcoin ETF has recorded net outflows for the fourth consecutive trading day. Since December 19th, the cumulative net outflow of funds from 12 US listed Bitcoin ETFs has reached $1.52 billion.
Russian Finance Minister: Bitcoin has been used in trade
According to Reuters, on December 25th local time, Russian Finance Minister Anton Siluanov stated that Russian companies have started using Bitcoin and other digital currencies for international payments.
This year, Russia has allowed the use of cryptocurrencies in foreign trade and taken measures to legalize the mining of cryptocurrencies such as Bitcoin. Russia proposed a comprehensive ban on cryptocurrencies in 2022, believing that such assets could disrupt the stability of financial markets. One of the main reasons for the country's significant shift was to respond to Western sanctions.
As part of the experimental system, we can use Bitcoin mined in Russia for foreign trade transactions. Such transactions are already happening. We believe they should be further expanded and developed. I believe this will be achieved next year, "he said, adding that international payments for digital currencies represent the future.
Earlier this month, Russian President Putin stated that the current US government's use of the US dollar for political purposes has weakened its position as a reserve currency and forced many countries to turn to alternative assets. He pointed out that Bitcoin is an example of such assets and stated that no one in the world can regulate Bitcoin. Putin's remarks indicate that the Russian leader supports the widespread use of cryptocurrency.
The US government holds 200000 bitcoins
According to Bitcoin Treasury data, the total amount of Bitcoin held by governments around the world is about 510000, equivalent to 3% of the total amount of issued Bitcoin (about 19.79 million), 5% by enterprises, and 6% by Bitcoin exchange traded funds (ETFs).
Most of the Bitcoin held by governments around the world comes from seizures made during the crackdown on crime. The United States is the country with the highest government holdings of Bitcoin. As of December 11th, the US government holds approximately 200000 bitcoins (about $20 billion). These bitcoins mainly come from cases of illegal transactions being investigated and dealt with.
US President elect Trump stated in July that he would not sell the approximately 210000 bitcoins held by the US Department of Justice, which will be used for national strategic reserves. Republican Senator Cynthia Lummis has proposed a bill aimed at establishing such reserves. According to the bill, the US Treasury Department will purchase 200000 bitcoins annually until the reserve reaches 1 million, with the purchase funds coming from Federal Reserve bank deposits and gold reserves.
According to an analysis report recently released by Barclays, providing funds for strategic Bitcoin reserves may require the approval of Congress and the issuance of new treasury bond. Barclays analysts said that considering the possible ways to establish such reserves, "we suspect that the plan will face strong resistance from the Federal Reserve.
During the campaign, Trump stated that if he could return to the White House, he would list Bitcoin as a strategic reserve asset of the United States. Although Federal Reserve Chairman Powell recently stated that the Fed does not intend to hold digital currencies, it still cannot stop people's unlimited imagination of Bitcoin becoming a national reserve.
As Trump's inauguration date approaches, some states in the United States have begun to consider testing the waters in advance. So far, three states in the United States have proposed the establishment of a Bitcoin strategic reserve.
On December 17th, Ohio Congressman Derek Merrin proposed a bill to establish a strategic Bitcoin reserve in the state. This bill is called the Ohio Bitcoin Reserve Act, which requires the establishment of a Bitcoin fund within the state Treasury and grants the Ohio Treasury Secretary the discretion to purchase the asset.
On December 12th, the official website of the Texas State House of Representatives showed that Republican state legislator Giovanni Capriglione submitted a legislative draft to establish a strategic reserve of Bitcoin within the state. Capriglione stated in an audio chat room on social media X that the proposed bill will enable Texas to begin establishing a Bitcoin strategic reserve by accepting taxes, fees, and donations in the form of Bitcoin, which will be held for at least five years.
In November, Pennsylvania House members proposed a bill calling for the establishment of a strategic Bitcoin reserve. According to the bill, Pennsylvania's Treasury Secretary will be able to purchase Bitcoin with "up to 10%" of the State General Fund, emergency reserves, and state investment funds. If 10% of the state's general fund is used, the Pennsylvania Department of Finance can purchase nearly $1 billion worth of Bitcoin.