Bitcoin price increases to $31.8K, but data from derivatives shows that BTC bears are still in the lead

Bitcoin’s price has risen to about $32,000, following XRP’s example. However, given this week’s expiration of $720 million worth of options, the price may fall again.

The expiration of the Bitcoin weekly options on July 14 might signify a dramatic shift in market mood and lead to a break below the important $30,000 support level.

Despite the initial positive spike brought on by the spot Bitcoin exchange-traded fund (ETF) demand, risk-on assets have not benefited from the most recent macroeconomic data.

To determine the likelihood of Bitcoin, it is essential to examine market mood.

BTC tickers decreased $30,208 but still trading over $30,000 on July 14.

In the short run, Bitcoin suffers from declining U.S. inflation.

In the United States, the consumer price index posted a 3.0% reading in June, which is the lowest reading since March 2021. The energy index fell by 16.7%, which was mostly to blame. Even while this shows a slowing of inflation, it is still over the Federal Reserve’s goal level of 2%, which is bad for Bitcoin since higher interest rates encourage investors to switch to fixed-income assets.

One may contend that, in the near term, the decline in inflation represents a successful Fed intervention and may have a beneficial impact on Bitcoin’s bullish momentum. But on July 12, the U.S. Dollar Index, which gauges the strength of the dollar against the most important foreign currencies, fell to its lowest level in 14 months.

In essence, the Fed’s capacity to avert a recession appears to be losing investors’ faith. The American economy, according to Wharton professor Jeremy Siegel, is « progressing smoothly, » and consumers don’t appear to be feeling the effects of increasing borrowing prices. But according to Siegel, people are presently spending the last of their financial reserves on vacation and summertime activities.

Following SEC comments, the odds of ETF approval lowered

The possibility of the spot ETF’s approval is the strongest argument in favor of the bulls, who will likely support additional rises and keep the price of bitcoin over $31,000 on July 14. But Gary Gensler, the head of the Securities and Exchange Commission (SEC) in the United States, has recently made some critical remarks.

On July 12, Gensler made the observation that cryptocurrency exchanges frequently provide services that are incompatible with one another, such as trading against one’s own customers. In addition, he issued a warning over the weak risk management procedures used by cryptocurrency platforms, which left them, open to market manipulation like wash trading.

The SEC has repeatedly denied petitions for spot Bitcoin ETFs over the years, citing considerable pricing on unregulated trading platforms. Concerns regarding the capacity of ETF providers to safeguard investors from deceptive and manipulative practices have also been raised by the regulator.

Despite being outnumbered, bearish instruments were better positioned

On July 4, the price of bitcoin moved above $31,000, supporting positive wagers made by traders utilizing options contracts. Why bulls have focused their wagers on Bitcoin prices trading over $31,000 is explained by another effort to breach the barrier on July 6 that was unsuccessful.

The $470 million call (buy) and $250 million put (sell) options’ respective open interest differences may be seen in the 0.53 put-to-call ratio. Due to the bulls’ overconfidence, the outcome will, however, be lower than the $720 million total open interest.

For instance, only $30 million worth of call options will be taken into consideration if Bitcoin trades at $30,500 at 8:00 AM UTC on July 14. This discrepancy results from the fact that if BTC moves below those prices after expiration, the right to buy Bitcoin for $31,000 or $32,000 is no longer valid.

Bitcoin bears have the opportunity to turn the tables and profit by $120 million

Based on the recent price movement, the four most likely outcomes are listed below. Depending on the expiration price, there are different numbers of options contracts for purchase (call) and sell (put) instruments available on July 14. The theoretical profit is determined by the imbalance favoring either side:

  • 200 calls vs. 4,100 puts in the $28,000–$30,000 range. The put (sell) instruments are $120 million better off as a result.
  • 1,000 calls vs 1,100 puts for a range of $30,000 to $31,000. Both the call and put instruments are equally rewarded in the overall outcome.
  • 200 puts and 4,200 calls for the range of $31,000 to $32,000. The call (purchase) instruments are $125 million in the driver’s seat overall.
  • 6,400 calls versus 0 puts between $32,000 and $33,000. Overall, there is a $210 million advantage for the call (purchase) instruments.

Bears have a chance to break below the $30,000 price support and secure a $120 million profit during the upcoming weekly options expiry, especially in light of recent macroeconomic data that favors further interest rate increases and Gensler’s critical remarks about exchanges’ capacity to serve as the foundation for a spot Bitcoin ETF approval.

Recommended For You

About the Author: Paul

Laisser un commentaire

Votre adresse e-mail ne sera pas publiée. Les champs obligatoires sont indiqués avec *