Bitcoin Bulls Hopeful Despite Resistance at $70,000, Eye Higher Gains Amid Geopolitical Shifts
Summary:
Despite numerous failed attempts, Bitcoin investors continue to speculate that prices will rise above $71,000, with derivatives betting on even higher values. However, Bitcoin's $6.5 billion options expiry on the last day of May suggests caution, given the continual resistance at $70,000. External factors such as economic policies, unemployment, and inflation trends heavily influence Bitcoin prices, while high-volatility triggers such as geopolitical and socio-political shifts continue to bolster this optimism. Nasdaq’s recent record-high also indicates an investor confidence in risk investments like Bitcoin.
Investors in Bitcoin (BTC) are generally optimistic, with constant speculation for a rise above $71,000, despite numerous setbacks, followed by derivative bets for higher $80,000 and $90,000 values. This outlook is bolstered by high-volatility triggers such as geopolitical fluctuations, societal political shifts, endorsement from U.S. presidents, and increasing corporate embrace of Bitcoin. Even though Bitcoin bulls ambitiously bank on values of $72,000 or beyond, a closer look at Bitcoin's $6.5 billion options expiry on the last day of May reveals skepticism given the unbroken resistance at $70,000 in the preceding week, rendering these highly positive call (buy) options potentially futile. For example, calls at $72,000 or higher constituted 91% of these trades, indicating high hopes for continuous rally pre-May 31, however, the bears may dodge substantial losses with the approaching deadline. Contradicting common crypto-beliefs, Bitcoin prices are deeply impacted by external factors like financial policies, inflation dynamics, joblessness, and faith in government-issued bonds. Market fear often results in cash holdings and short-term US bonds despite Bitcoin's fleeting links with the stock market and gold. On the 28th of May, the Nasdaq Composite index smashing its previous record, surpassing 17k points signifies faith in the Federal Reserve’s plan for a soft economic landing. This aims to draw inflation back to a 2% target while keeping corporate profits well in most sectors; indicating good things for risk-investments like Bitcoin due to forecasted lower interests rates. Overly eager wagers for the Bitcoin monthly options expiry on May 31 at 8:00 am UTC mirror the 25% rise on BTC's jump from $56,883 to $71,417 in the initial 20 days of May. A point which failed to hold strong, especially with the approval of the spot Ethereum exchange-traded fund (ETF) in America offering competition for institutional investors. Collective data suggests a $270 million boon for those bullish on Bitcoin, should BTC go over $70,000. To understand the odds stacking up against each BTC expiry price, it's vital to review the open interest on the call (buy) and put (sell) options. Deribit's $4.62 billion open interest is likely to disappoint, as 99% of options could be dismissed if BTC trades short of $70,000 on May 31. In the same vein, put investors may face losses if Bitcoin lingers around $67,800 at the monthly expiry, since merely 5% of the $1.7 billion contracts were set at $68,000 or more. Although Deribit leads the options market, holding 71% of Bitcoin’s monthly open interest share in May, examining aggregate data is prudent, given the fluctuation of investor profiles across exchanges. Following close on the heels of Deribit is the Chicago Mercantile Exchange (CME) with a $745 million open interest, trailed by OKX exchange at $600 million, Binance at $315 million, and Bybit at $160 million. Should Bitcoin maintain its stance around $67,800 on May 31, the combined open interest for call options would be $135 million, and for put options, it would be $145 million at $68,000. Both bulls and bears are incentivized to manipulate the price pre-expiry. For instance, should the price drop to $65,900, it would benefit put options by $95 million, while a rise to $70,000 or above would rake in a $270 million advantage for call options. As the monthly expiry draws near, bulls exceeding the $70,000 mark for Bitcoin's price seems unlikely due to a current lack of short-term catalysts, hinting more towards a neutral outcome approximately near $68,000. This data is intended only for generic informational purposes and should not be construed as legal or investment advice. All views, thoughts, and opinions shared are the author's alone and may not represent or reflect the views and opinions of Cointelegraph.
Published At
5/28/2024 9:25:46 PM
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