Bitcoin Price Drops Below $29,000 as Options Expiry Approaches
Bitcoin closed below $29,000 for the first time in 56 days, potentially due to concerns about inflation and interest rate increases. The upcoming $580 million Bitcoin options expiry on Friday could further pressure Bitcoin and complicate its search for a bottom.
Federal Reserve Minutes Have Limited Impact
The release of Federal Reserve minutes expressing concerns about inflation did not have a significant impact on traditional markets. The U.S. 10-year Treasury yield had already been rising, indicating skepticism about the Fed’s ability to control inflation. The decline in Bitcoin’s price may also be influenced by concerns about China’s economy.
Bitcoin Bulls Caught Off Guard
Bitcoin bulls were caught off guard by the latest price drop below $29,000. The put-to-call ratio reflects the difference in open interest between buy and sell options. The outcome of the options expiry is expected to favor put (sell) instruments, potentially resulting in a further correction in Bitcoin’s price.
Three Likely Scenarios Based on Price Action
The three most likely scenarios for the options expiry are as follows:
- Between $26,000 and $28,000: The net result favors put (sell) instruments by $140 million.
- Between $28,000 and $28,500: The net result favors put (sell) instruments by $60 million.
- Between $28,500 and $29,500: The net result favors put (sell) instruments by $20 million.
Bears Expected to Maintain Advantage
Given the growing concern among investors about an economic slowdown, Bitcoin bears are expected to maintain their advantage. The approval of a spot exchange-traded fund, which is the BTC bulls’ goal, is unlikely. This suggests the potential for a further correction in Bitcoin’s price.
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