Bitcoin Bears Retain Market Edge
Bitcoin and some altcoins have grown a little over the past week, however, the first cryptocurrency is still in a downtrend after peaking at $69,000 on November 10, 2021.
Accordingly, bears feel more comfortable than ever under the current conditions, especially when Bitcoin bulls have long been unable to break through the ardent resistance at the level of $50,000.
According to Cointelegraph, investors are closely watching everything related to the US Federal Reserve System. As there is a clear pattern over the past 12 months between the movement of Fed bonds and assets and the movement of Bitcoin.
This close correlation shows how decisive the Federal Reserve’s monetary policy has been on riskier assets, including Bitcoin. Moreover, the decline in yield over the past three weeks from 1.64 to 1.43 partly explains the weakness seen in the cryptocurrency market.
In the derivatives market, a Bitcoin price below $48,000 gives the bears the carte blanche with the $755 million BTC options expiring on December 17th.
At first glance, $ 470M calls (buy) options overshadow $ 285M put (sells), but the 1.64 call/put ratio is deceiving as a 14% drop in Bitcoin price since November 30th is likely to cancel out most of the bullish options.
If the price of Bitcoin fluctuates between $45,000 and $47,000, there will be 110 call options on the market on Friday, December 17th versus 2,400 put options. In this case, the net result will be USD 105 million, including put options (bears).
Between $47,000 and $48,000 there will be 280 calls available versus 1,900 puts. The net result is $75 million favouring the put instruments. And only $28 million in call options.
In case the price fluctuates between $48,000 and $50,000, there will be 1190 calls available versus 1130 puts. The net result is balanced between call and put options.
The only way for the bulls to avoid significant losses beyond December 17 is to keep the Bitcoin price above $48,000. However, if the current short-term negative sentiment prevails, the bears could easily bring the price down 4% from the current $48,500 and profit up to $105 million if the Bitcoin price stays below $47,000.