Short-term profit-taking as Bitcoin (BTC) falls below 42K, while AVAX rises against the trend.

Yesterday, the cryptocurrency market started to decline around 8 AM Taiwan time, with Bitcoin wiping out a week's worth of gains. BTC dropped to $40,300 at one point, while ETH hit a low of $2,127. With the pause in Bitcoin's upward momentum, altcoins have shown significant increases, with Avalanche and Cardano each rising by over 50% last week.

The cryptocurrency market experienced a sharp decline with Bitcoin erasing a week's worth of gains. Is BTC's pullback due to filling the CME gap?

Short-Term Holders Taking Profits

According to an analysis by ETC Group, the performance of crypto assets surpassed traditional assets such as stocks last week. However, with the rise in short-term profits, more BTC is being sent to exchanges for profit-taking.

The market overall remains in a strong profit environment, indicating that some investors may be inclined to take profits. Data provided by Glassnode shows that 88.3% of BTC addresses are in a profitable state, and 77.6% of ETH addresses are in a profitable state, nearing the highest levels so far this year.

In particular, short-term holders, investors with a holding period of less than 155 days, have been transferring profits of BTC to exchanges at the highest levels since July this year. With the increasing selling pressure, this has undoubtedly to some extent suppressed the current uptrend.

Net Outflows in Crypto Asset ETPs, Options Trending Towards Downside Protection

Last week also saw the first week of net outflows in crypto asset ETP exchange-traded products since early October, with outflows exceeding $18.2 million as of last Friday, mostly concentrated in Bitcoin ETPs with -$13.1 million.

According to data from Glassnode, the open interest in BTC options contracts across all exchanges has increased by approximately 23,000 BTC. In this context, the put-call open interest ratio has risen from 0.45 to 0.50, indicating that options traders have increased downside protection over the past week.

As of the report's writing, the majority of BTC call options open interest for contracts expiring at the end of December are centered around a $40,000 price. The "maximum pain theory" suggests that we will converge around this price in the short term.

Altcoin Rotation Surges, ADA and AVAX Up Over 50% Last Week

As the Bitcoin rally pauses, altcoins have shown significant increases, with Avalanche and Cardano rising by over 50% each last week. Compared to the previous week, altcoins have significantly outperformed Bitcoin, with 50% of the altcoins tracked by ETC Group outperforming Bitcoin last week.