Bullish Market Anticipated as Bitcoin Halving Approaches, Experts Urge Caution
Summary:
As the anticipated Bitcoin halving event approaches, industry stakeholders, particularly professional traders, are closely observing market shifts. Historically, these events have prompted a bullish sentiment, made evident by Bitcoin's 59% appreciation year-to-date in 2024. Options strategies are increasingly favored by traders, as indicated by the $4.5 billion open interest for options expiring on June 28 at Deribit. Despite this, experts caution against expecting simple post-halving price increases, as Bitcoin's price trends have been influenced by various external factors. However, considering past trends and current strategies, the market shows a tilt towards neutral-to-bullish strategies for the upcoming Bitcoin halving.
As the Bitcoin halving event approaches, industry participants, particularly professional traders, are closely monitoring fluctuations within the ecosystem. Historically, the build-up to halving events has spurred a bullish outlook, especially in following months as opposed to the exact halving date, due to the delayed effect of decreased mining yield on the market. Bitcoin miners, who hold a central role in this ecosystem, often opt against daily liquidation of their assets, amassing instead under the premise of an imminent bullish market—a viewpoint firmly backed by Bitcoin's 59% appreciation year-to-date in 2024. This collective anticipation of market growth further restricts the supply available for selling, potentially driving prices upwards.Yet, some experts advise against assuming simplistic post-halving price rises, noting that Bitcoin's price trajectory throughout the past 15 years has been influenced by a variety of external forces, such as the general economic climate, investor risk appetite, monetary policies, and Bitcoin's interplay with the stock market. Given these complexities, relying only on historical trends from past halvings might be somewhat naive.As the Bitcoin halving event looms, professional traders are increasingly resorting to options strategies which leverage positions with a minimum upfront deposit, thus minimizing the direct liquidation risk commonly found in futures markets. Notably, the call (buy) and put (sell) options open interest for the June 28 expiry at Deribit has climbed to $4.5 billion, indicating a noteworthy imbalance, with bullish positions tripling bearish ones. However, this macro outlook demands a more in-depth examination as cryptocurrency traders generally tend to promote optimism.Open call interest in Deribit Bitcoin with an optimistic target of $140,000 and $200,000 for the June 28 expiry may seem overly hopeful. Eliminating price bets exceeding $90,000, the realistic call options open interest sits around $2.72 billion. In contrast, several put options set before Bitcoin climbed over $50,000, reducing the probable profit margin. There's a measly $250 million open interest in put options valued at $57,000 or above. Bitcoin's surprising performance surge caught pessimists off guard due to unforeseen factors, such as successful approval of a U.S. spot ETF, inflation decline to 3%, or the evasion of an anticipated worldwide economic downturn by June 28. As such, bearish scenarios relating to the Bitcoin halving seem even more unlikely.Past fears of a "death spiral" ignited by reduced block rewards and a subsequent decline in miner involvement have consistently been refuted. Even with variable hashrate levels, Bitcoin's network adjusts its difficulty every 2016 blocks, approximately every two weeks, to ensure stability. If we entertain a hypothetical scenario where Bitcoin's price plummets to $47,000 by June 28, a 32% reduction from present levels, the put options open interest would stand at $422 million. In comparison, call options up to $46,000 reflect a $670 million exposure, underlining a market's inclination towards neutral-to-bullish strategies for the Bitcoin halving, at least until the June 28 expiry. This narrative doesn't provide investment counsel or suggestions. All investments and trading moves carry risk, and readers are encouraged to conduct their personal research before making a decision.
Published At
4/9/2024 7:21:34 PM
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