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Markets have rallied following the FOMC meeting, but Bitcoin’s bearish still have the upper hand in the near term. Bitcoin, altcoins, and equities all surged after the Federal Reserve unveiled its policy path for 2022, but bears still have the upper hand in this week’s $755 million options expiration.
Bitcoin’s price has been on the down since hitting an all-time high of $69,000 on Nov. 10, when the Labor Department reported that inflation in the United States had surpassed 6.2 percent.
While this news may be good for non-inflationary assets, the US Securities and Exchange Commission’s (SEC) rejection of VanEck’s physical Bitcoin exchange-traded fund (ETF) on Nov. 12 caught some investors off the surprise.
Bitcoin, altcoins, and equities all surged after the Federal Reserve unveiled its policy path for 2022, but bears still have the upper hand in this week’s $755 million options expiration.
While the denial of the ETF proposal was widely anticipated, the grounds cited by the regulator may be concerning to certain investors. Due to uncontrolled exchanges and high trading volume based on Tether’s (USDT) stable coin, the US SEC was unable to avoid market manipulation in the larger Bitcoin market.
Analyzing the larger market structure is crucial, especially as investors pay careful attention to Federal Reserve meetings in the United States. Regardless of the amount of the Fed’s anticipated reduction of its bond and asset-buying program, Bitcoin’s price has tracked US Treasury rates over the past year.
Clearly, there are several factors at play here; for example, the market recall on November 26 was mostly due to difficulties with a few of the new COVID-19 variants. By virtue of derivatives markets, a bitcoin price below $ 48,000 gives bears complete control over a $ 755 million BTC expiry.
At first impression, $ 470 million in calls (buy) options appear to outnumber $ 285 million inputs (promote), but the 1.64 call-to-put ratio is misleading, as a 14 percent decline in value since November 30 would certainly wipe out much of the bullish charges.
Only $28 million worth of call (purchase) options will be available at the expiration if Bitcoin’s price remains below $49,000 at 8:00 a.m. UTC on Dec. 17. In other words, if Bitcoin is selling below $49,000, the right to acquire it at that price is worthless.
Bears are content with Bitcoin trading below $57,000.
The three most likely possibilities for the $755 million options expiration on Friday are as follows. The possible profit is represented by the imbalance favoring either side. A trader, for example, may have sold a call option to get positive exposure to Bitcoin (BTC) above a certain price. However, there is no simple solution.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
