Funds Expected to Exit Crypto Market During Christmas Week, Researcher Predicts

Funds Expected to Exit Crypto Market During Christmas Week, Researcher Forecasts

According to Adam, a macro researcher at the crypto options trading platform Greeks.live, a fund withdrawal from the cryptocurrency market is expected during the Christmas week. This prediction follows past trends where the U.S. and European stock markets close for the holiday season. Adam’s insights, shared through a post on X (formerly Twitter), highlight that this trend of capital outflows is becoming more pronounced in comparison to previous years, indicating a potential dip in market liquidity.

The Role of ETFs in Crypto Funding

Exchange-Traded Funds (ETFs) continue to play a crucial role in providing external funding to the crypto market. However, according to Adam, ETFs are currently under pressure due to the market’s volatility and the capital outflows expected in the coming days. ETFs, which have been a significant source of investment in cryptocurrencies, especially for institutional investors, may face challenges during the holiday period when the broader market slows down. This could lead to diminished liquidity in the crypto space as funds are withdrawn or repositioned, contributing to the potential downturn or stagnation of crypto asset prices.

$12 Billion in Crypto Options Set to Expire

A major contributor to the fund withdrawals and market adjustments is the impending expiration of nearly $12 billion in crypto options this week. This represents over 40% of the total open interest in the market. With such a large portion of the market in crypto options set to expire, major investors are expected to adjust their positions to align with new market conditions. These adjustments could trigger further market movements as traders rebalance their portfolios in preparation for the expiration of these options.

The expiration of crypto options often leads to increased volatility, but Adam predicts that the Christmas week will see relatively low volatility. This can be attributed to the general market slowdown that occurs during the holiday period, as many institutional investors take time off, and retail activity tends to drop.

Low Market Volatility Expected This Christmas Week

Adam’s forecast also suggests that market volatility will remain low throughout the Christmas week. As is often the case during major holidays, crypto trading volume is expected to decrease, leading to less drastic price movements and a quieter trading environment. Investors and traders may refrain from making significant market moves as they await the end of the holiday season and the start of January 2025, when the market may see a return to more active trading.

The relatively low volatility is not unusual for the period between Christmas and the New Year, a time when markets globally experience reduced activity. The quiet trading conditions could persist until January, when institutional and retail investors return to the market with renewed focus.

Focus Shifts to the Inauguration of President-elect Donald Trump

While the Christmas week may see subdued market activity, attention is expected to shift toward the upcoming inauguration of U.S. President-elect Donald Trump on January 20, 2025. This high-profile event is likely to attract significant media attention and could influence market sentiment, including the crypto market.

If President-elect Trump’s administration moves forward with pro-crypto policies or announcements regarding digital asset regulation, it could reignite interest in cryptocurrencies as investors look for clarity on how new policies might shape the market. Conversely, a more cautious stance by the incoming administration could lead to further market uncertainty, particularly if there are delays in legislative decisions.

Conclusion: A Quiet Christmas Week with Long-Term Implications

The crypto market is expected to experience fund withdrawals and relatively low volatility during the Christmas week. As $12 billion in crypto options expire and ETFs face pressure, market liquidity is likely to decrease, leading to potential price stagnation or mild corrections. Despite this temporary slowdown, the broader trend for the crypto market in 2025 could be influenced by policy decisions and macro-economic factors as we approach the inauguration of President-elect Donald Trump.

While Christmas week may offer a quiet period for crypto traders, the events leading into the new year and January 20, 2025 will likely drive market sentiment and determine the next phase of cryptocurrency growth.

To learn more about the innovative startups shaping the future of the crypto industry, explore our article on latest news, where we delve into the most promising ventures and their potential to disrupt traditional industries.