Bitcoin Gets Fresh Start After Flush Of Options Open Interest
January 04 2022 - 1:00PM
NEWSBTC
Bitcoin started 2022 on a different trajectory than the one
expected by most traders. Moving sideways for the majority of Q4
last year, the first crypto by market cap seems proposed to more
volatility in either direction. Related Reading | Bitcoin Breaks
$51k Again As 20k BTC Flows Out Of Exchanges As of press time,
Bitcoin trades at $46,803 with sideways movement in the last 24
hours. BTC’s price returned to its current levels after a rejection
around the $50,000 area as 2021 came to an end. Data from Material
Indicators shows strong support below Bitcoin’s current price as
$10 million in bids order sit around $45,000 with an additional $36
million distribute between $44,000, $43,000, and $42,000. These
levels could become the bulls’ final line of defense in case of
further downside. Above Bitcoin’s current price there is no
significant resistance until $59,000 which records $13 million in
ask orders. This doesn’t imply BTC will move straight in that
direction as buyers still need to display conviction and hold the
aforementioned support levels. According to data from Arcane
Research, the Bitcoin market for the derivatives sector has been
reset, as $5.8 billion in BTC options expired on December 31st.
This represents one of the largest expiry events which led to a
47.8% decline in Open Interest (OI) for this sector. Arcane
Research claimed the following: This (decline in OI) could be
circumstantial, but it could also be caused by the market structure
with options expiries as well as futures expiry (…) The research
firm also claimed that most of the options with far out of the
money bullish strikes ended 2021 “worthless”. The options market
has been a great part of the dynamics for the BTC’s price action in
the last 2 years and, if history repeats, could hint at what’s next
for the cryptocurrency in Q1, 2022. Arcane Research said: The
options market could potentially contribute to anchoring the BTC
price. In January, February, March, April, October, and November,
bitcoin saw strong returns in the first half of the expiry period
and negative returns in the second period. New Year, New Market
Dynamics For Bitcoin? The Price Of Adoption Despite the support
below, Bitcoin could attempt to fill the wicked at $42,000 printed
on December 3rd. Analyst Justin Bennet claimed that BTC has
historically dipped into similar downside movements before resuming
its bullish momentum. Bennet believes BTC’s price action can no
longer be classified as only bull v. bear market. On the contrary,
the analyst thinks there are more “gray areas” due to the
participation of new players and institutions. Related Reading |
Market Gets Cozy With Bitcoin Trapped? Why BTC Is Gearing Up For A
Short Squeeze John Bollinger, the creator of the Bollinger Bands
indicator, seems to share a similar position on the potential
changes experienced by the BTC market. Via Twitter, Bollinger said:
Some thoughts on bitcoin. You have to be careful what you wish for:
Everyone wanted wide adoption, listed futures, options, ETFs, etc.
Well, you got all that and more including burgeoning regulation.
The rub is that these things have totally changed the character of
trading.
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