Why Bitcoin's Upside May Be Capped

Bitcoin is sailing into calmer waters following last week’s tumultuous event, which triggered the worst cascading set of liquidations in crypto’s 16-year history.

While Bitcoin bounced on Monday, the momentum has slowed, leaving it to trade at roughly $113,500, down about 1.5% over the past 24 hours, according to CoinGecko data.

Heightened bearish activity during last week’s sell-off has led to a significant uptick in put options expiring on October 31, according to Hendrik Ghys, founder of futures and options exchange Thalex Global, in a Monday tweet.

Implied volatility, a key metric reflecting market expectations of future price swings, has repriced downward to the low 40s in the short term and around 45% for longer horizons, Ghys wrote.

The drop indicates that the initial panic following the crash has subsided, with traders recalibrating their risk.

Market makers, who were long gamma heading into the event, remain in that position post-crash, Ghys noted. In other words, market makers would need to sell during rallies and buy during dips to hedge their positions and offset losses. 

Ghys takes a cautiously optimistic stance, noting that market makers are likely to reduce or close their positions at “better prices than a week ago,” provided volatility subsides, allowing Bitcoin to hold its ground.

“While short-term volatility persists—potentially pushing Bitcoin toward $100,000 support and Ethereum to $3,600—we see this as a healthy correction that clears weak hands and sets the stage for renewed accumulation,” Ryan Lee, chief analyst at universal exchange Bitget. 

Despite the short-term uncertainty and potential correction risks, Lee maintained a bullish outlook in the long run, noting that Bitcoin could rebound to $130,000 and Ethereum to $4,800, citing “institutional inflows via exchange-traded funds and digital asset treasuries.”