Bitcoin erases today’s gains as bears try to pin BTC price below $18,000

December 14 Bitcoin (BTC) topped $18,000 for the first time in 34 days, representing a 16.5% gain since November 21st. lows of $15,500. The move followed a 3% gain in 3-day S&P 500 futures, which regained critical support at 4,000.

Bitcoin/USD index (orange, left) and S&P 500 futures (right). Source: TradingView

While the price of BTC started the day on a positive note, investors eagerly awaited the US Federal Reserve Committee’s decision on interest rates and comments from Fed Chairman Jerome Powell. The subsequent 0.50% rise and Powell’s explanation as to why the Fed will maintain its current policy course gave investors good reason to doubt that BTC price will hold current gains until the USD options expire. 370 million December 16

Analysts and traders expect some weakening of the macroeconomic tightening movement. For those unfamiliar, the Federal Reserve previously increased its balance sheet from $4.16 trillion in 2020. February. to a staggering $8.9 trillion by 2022

Since then, the monetary authority has tried to divest itself of debt instruments and exchange-traded funds (ETFs), a process known as tapering. But over the past five months, assets have fallen by less than $360 billion.

Until there is clearer guidance on economic policy from the world’s largest economy, Bitcoin traders will likely remain skeptical of a sustained price move regardless of direction.

The bears made most of their bets below $16,500

Open interest for December 16 the options expire at 370 million. USD, but the actual number will be lower as the bears were surprised after the move to USD 18,000 on December 14. and $16,500, which seems unlikely given market conditions.

Cryptocurrencies: Bitcoin Price Today
Aggregate Bitcoin options open interest on December 16. Source: CoinGlass

A buy-to-sell ratio of 0.94 indicates a balance between 180 million. USD open interest to buy (buy) and 190 mln. USD put options. But with Bitcoin approaching $18,000, most bearish bets will likely lose value.

If the value of Bitcoin exceeds $18,000 on December 16. 8 o’clock UTC, virtually none of these sales options will be available. This difference is due to the fact that the right to sell Bitcoin at $17,000 or $18,000 is worthless if BTC trades above this level at expiration.

Bulls can earn up to 155 million

Below are the four most likely scenarios based on current price action. From the amount Bitcoin options contracts December 16 available call (bullish) and put (bearish) instruments vary depending on the expiration price. The imbalance in favor of both sides is a theoretical benefit:

  • From $16,500 to $17,500: 1,400 call options and 1,200 put options. The net result is balanced between call and put options.
  • From $17,500 to $18,000: 3700 call options and 100 put options. The net result is favorable to buy instruments (bullish) for 60 million. USD.
  • Between $18,000 and $19,000: 6,200 call options and 0 put options. The net result is favorable to buy instruments (bullish) for 115 million. USD.
  • From $19,000 to $19,500: 8,100 call options and 0 put options. The net result increases the purchase of instruments by 155 million. USD.

This crude estimate takes into account put options used in small-scale bets and call options used only in neutral or large trades. However, this simplification ignores more complex investment strategies.

This is a warning from a well-known Bitcoin investor against the collapse of Binance

For example, a trader could sell a put option and effectively gain positive exposure to Bitcoin above the specified price, but unfortunately there is no easy way to measure this exposure.

The FTX contagion continues to impact markets

In bear markets, it is easier to negatively influence the price of Bitcoin due to the tone of the news flow and its excessive impact on the cryptocurrency market.

Recent negative cryptocurrency news includes reports of a US court filing that showed “unfair” commercial advantage to Alameda Researcha trading and market-making firm associated with the failed exchange FTX.

The U.S. Commodity Futures Trading Commission says Alameda Research had faster trade execution times and an exemption from the exchange’s “automated settlement risk management process.”

By Dec. 16, the bulls’ best-case scenario to increase their profits to $155 million. This seems unlikely given the ongoing regulatory and contagion risks. For now, it is likely that the bears can push BTC below $18,000 and avoid further losses.

The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading step involves risk, so readers should do their own research before making a decision.

Investments in cryptocurrency assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed at or available to investors in Spain.


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