Bitcoin (BTC) price slumped below $22,400 after Fed Chairman Jerome Powell’s hawkish statements. Powell warned he was prepared to rein in inflation by pushing for rate hikes. The forecasts for the future in the crypto money market, where the agenda is intense, are as follows.
Bitcoin bulls can be swept away by these developments
Fed Chairman Powell said the “final level of interest rates is likely to be higher than previously anticipated” and that the latest economic data is “stronger than expected”. These statements put pressure on stocks, commodities and risky assets such as Bitcoin, significantly increasing investors’ expectations for a 50 basis point rate hike on March 22.
This move may explain why the $565 million weekly Bitcoin (BTC) option expiring on March 10 is supporting the bears. However, additional negative crypto market events may also have played a significant role.
Silk Road and Mt. Bitcoin (BTC) remaining from Gox on the move
The movement of multiple wallets linked to the seizure by US law enforcement on March 8 increased the price pressure on Bitcoin investors. More than 50,000 Bitcoins worth $1.1 billion have been transferred, according to data shared by on-chain analytics firm PeckShield.
Also, 9,860 BTC was sent to Coinbase, raising concerns about coins being sold on the open market. These wallets are directly linked to the old Silk Road darknet market and were seized by law enforcement in November 2021.
https://twitter.com/CoinMarketCap/status/1456022130190168064
Mt. Gox creditors must register and choose a compensation repayment method by March 10. The move is part of the 2018 rehabilitation plan, and creditors must choose between an “early lump sum” and a “final payment.” It’s unclear when creditors can expect payments in crypto or fiat currency, according to the sources, but estimates suggest that the final settlement could take several years.
As a result, Bitcoin’s price drop to $22,000 on March 8 effectively confirmed the bears’ advantage, with options expiring on March 10.
Bulls have bet a lot more, but most will be worthless
The March 10 option expiration has $565 million open interest, but the actual figure will be lower because the bulls have concentrated their Bitcoin positions above $23,000.
The buy-to-sell ratio of 1.63 reflects the open interest disparity between $350 million call (buy) options and $215 million put (sell) options. However, the expected outcome is likely to be much lower as the bulls were caught off guard when Bitcoin fell below $23,000 on March 3.
For example, if the price of Bitcoin stays near $22,100 on March 10, only $6 million of put options will be available. This difference occurs because the right to buy Bitcoin at $22,500 or $24,000 becomes void if BTC trades below that level at expiry.
Most likely outcomes favor bears by a large margin
Below are the four most likely scenarios based on the current price action. The number of options contracts valid for buy (bullish) and put (bear) instruments on March 10 varies depending on the expiry price. The imbalance in favor of both parties creates the theoretical profit:
- Between $20.00 and $21,000: 7,200 sell against 0 buy. Vendors hold $150 million.
- Between $21,000 and $22,000: Buy 100, sell 5,000. Sellers hold $105 million.
- Between $22,000 and $23,000: buy 1,400 and sell 1,900. The bears have a modest advantage and earn about $55 million.
- Between $23,000 and $24,000: buy 4,600 and sell 600. The bulls hold $95 million.
- This rough estimate only takes into account call options on bullish forecasts and put options on neutral to bearish trades. However, this oversimplification excludes more complex investment strategies.
For example, by selling a call option, a trader can effectively lower Bitcoin at a certain point and profit from it, but there is no easy way to predict its timing. To reverse the situation and secure a potential profit of $95 million, Bitcoin bulls need to push the price above $23,000 on March 10. However, the negative news is macroeconomic pressure and the end of Mt.Gox positions. As Kriptokoin.com, we have included an important decision in favor of BTC in this article.
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