An early morning uptick in the Bitcoin market on Wednesday, led by Tesla’s announcement that it would now allow Bitcoin payments, turned into nervousness ahead of the US session close – leading to a drop of more than $ 5,500 and the day 3.81 Finished percent lower.
Powell strikes again
Bitcoin’s seesaw movements occurred largely in the wake of Jerome Powell’s testimony before the Senate Banking Committee. The Federal Reserve chairman said he was not worried about the recent surge in longer-term bond yields, adding that their surge drove investors optimism about the recovery of the US economy amid the prospect of the vaccine launch, COVID- 19 reflects.
There was a general expectation that the Fed would intervene if bond yields rose too fast too fast. But so far the US Federal Reserve has avoided intervening, leading to fears that it would let yields rise indefinitely.
As a result, assets that have performed extremely well during the pandemic risk being revised downwards. That includes tech stocks and bitcoin.
On Wednesday, Bitcoin and Wall Street rose and fell in tandem, showing a very similar reaction to Powell’s testimony.
Bitcoin options expire
The shaky moves in the Bitcoin spot market also appeared as the focus shifted to a record-breaking option decline.
An options contract is a type of derivative that gives traders the right, but not the obligation, to buy or sell the underlying asset at a set price (or strike price) on or before an expiration date. In the meantime, an out-of-the-money (OTM) situation arises when the exercise price is higher or lower than the spot price.
Around 104,000 contracts worth more than 6 billion dollars are about to expire on the major exchanges: Deribit, Huobi, OKEx, LedgerX, and others. Most of these open contracts come from Deribit, the world’s largest crypto options exchange by trading volume.
It is on the way to seeing a monthly bitcoin option expiration of more than 96,000 contracts.
The current call options are with exercise prices above $ 52,875 OTM. Likewise, the put options at exercise prices below the current spot price are also OTM.
Data obtained by ByBt.com shows that roughly 43 percent of Bitcoin options contracts that expire this Friday are worthless.
With the remaining open interest, the bulls remain in control – because the Bitcoin options call / put ratio is 1.13.
If Bitcoin continues to trade above $ 52,000 (see the Plus500 Buy Bitcoin Guide), most put options will lose their value, which in turn increases the chances of holding bullish call options.
Upside interest lingers near $ 58,000, which means the Bitcoin spot market could experience tremendous volatility between the two levels in the upcoming sessions.
Proof of text: Bitcoinist