Bitcoin has attempted to break out of the downtrend over the past week, failing on its first attempt to break above the $22,600 resistance level on June 16, before rising to $21,400 on a second attempt on the 21st, before retracing 8%. After two failed attempts to break the trend, Bitcoin once fell below $20,000 today (23), causing the market to doubt whether $17,600 is the real bottom.
The longer Bitcoin takes to break out of this bearish pattern, the stronger the resistance line it faces, a trend that traders are watching closely. That’s a big reason why bulls are showing strength this week when the $2.25 billion monthly options settlement expires.
Regulatory uncertainty continues to hit the cryptocurrency market as European Central Bank President Christine Lagarde said she sees the need for continued scrutiny of the cryptocurrency space. On the 20th, she expressed her views on staking and lending activities in the cryptocurrency industry: the lack of regulation usually covers fraud, there are completely illegal claims about valuation, and it usually involves speculation and criminal transactions.
The recent forced liquidation of bitcoin holdings by bitcoin miners has also put more pressure on bitcoin prices. According to Arcane Research, listed bitcoin miners sold 100% of their home-mined bitcoins in May, compared with the 20% to 40% that were typically sold in previous months. The price of bitcoin has pulled back and corrected, compressing the profitability of miners, as the cost of bitcoin mining exceeds the profit that can be sold.
The June 24 expiry date of bitcoin options is keeping investors on their toes, as bitcoin bears are likely to make a profit of $620 million by driving the price below $20,000.
Open interest at the June 24 option expiration date is now worth $2.25 billion, but the number of contracts in effect is much lower due to some bulls being overly optimistic. These overly speculative traders completely miscalculated the market, when Bitcoin fell below $28,000 on June 12, but bulls are still betting that Bitcoin will exceed $60,000.
A bid/put ratio of 1.7 shows that $1.41 billion in call open interest dominates, compared to $830 million in puts. Still, with bitcoin below $20,000, bets that represent a majority long are likely to become worthless.
If Bitcoin remains below $21,000 at 8:00 a.m. UTC on June 24 (4:00 p.m. Beijing), only a 2% call would be valid. Because those options to buy bitcoin above $21,000 will become invalid.
Here are the three most likely scenarios based on current currency price movements:
1. The currency price is between $18,000 and $20,000: 500 calls vs. 33,100 puts. The net result favored the put option by $620 million.
2. The currency price is between 20,000 and 22,000 US dollars: 2,800 calls VS 2,700 puts. The net result favored put options by $520 million.
3. The currency price is between $22,000 and $24,000: 5,900 calls vs. 26,600 puts. The net result was in favor of put options by $480 million.
This means that Bitcoin bears must push the price of Bitcoin below $20,000 on the 24th to make a profit of $620 million. On the other hand, the best-case scenario for the bulls is that they would need to lift the price above $22,000 to reduce losses by $140 million.
Bitcoin bulls liquidated $500 million in leveraged long positions on June 12-13, so their margin should be lower than what is needed to push the price higher. Considering such data, the bears have a higher chance of keeping the currency price below $22,000 before the option expires on the 24th.
As the price of cryptocurrencies dropped, the price of miners also entered a historically low-price range. Compared with the direct purchase of cryptocurrencies, investing in mining machines will isolate the market fluctuations, so the risk will be relatively small. In the current environment of volatile cryptocurrency prices, mining machines are an investment option that can be considered.
Post time: Aug-22-2022