The Bitcoin price is low after hitting$69,000 high on 10th Nov, right as Labor Department reported that inflation in the US had surpassed 6.2 percent. Although the news of downfall may be suitable for assets that are non-inflationary, the US Securities and Exchange Commission’s (SEC) rejection of VanEck’s Bitcoin exchange-traded fund (ETF) on Nov. 12 caught some investors off a surprise.
The rejection of the proposed ETF was widely anticipated. The grounds cited by regulators are quite a concern for certain investors. The SEC highlighted uncontrolled exchanges and a high volume of trading wholly based on stablecoin of Tether’s (USDT) as reasons for the failure towards the manipulation of the market in the larger Bitcoin market.
Analyzing the larger market area is crucial, especially as investors pay careful attention to Federal Reserve meetings in the United States. Irrespective of the amount of the Fed’s anticipated reduction of its bond along with assets buying program, Bitcoin’s price has tracked US Treasury rates over the past year.
The Federal Reserve’s monetary policy with risky assets, such as Bitcoin, has been quite decisive, as seen by this close association. Furthermore, the drop in yield in these previous three weeks of 1.64 to 1.43 explains some of the crypto market’s weaknesses. There are also other factors like the market downturn on 26th November, primarily due to fears of the latest variant COVID-19. In terms of derivatives, the price of Bitcoin is below $48,000, giving entire control over the $755 million BTC options expiry on Friday.
The $470 million buy options appear to outnumber the $285 million sell options at first glance. Still, the 1.64 call-to-put ratio is misleading since the 14 percent price decline since 30th Nov will erase the majority of the bullish bets.
There are three possibilities for the expiring of $755 million options on Friday are follows. The possible profit is represented by the imbalance favoring either side. In other words, the total number of active calls (buy) and put (sell) contracts fluctuates based on the expiry price:
- 110 calls vs. 2,400 puts in the midst of $45,000 and $47,000. The overall outcome favors the put (bear) options by $105 million.
- 280 calls vs. 1,900 puts in the midst of $47,000 and $48,000. The overall outcome favors put (bear) instruments by $75 million.
- 1,190 calls vs. 1,130 puts in the midst of $48,000 and $50,000. As a result, the call and bear options are evenly distributed.
Bulls can only escape from a substantial loss in the 17th December expiration if Bitcoin’s price remains over $48,000. If the present short-term bearish mood persists, bears will be pushing the price below 4% from its current level of $48,500, profiting up to $105 million in case Bitcoin remains below $47,000.