Bitcoin price rallies to $31.8K, but derivatives data highlights BTC bears’ advantage

This July 14 Bitcoin play options expiry holds the imaginable to beryllium a important turning constituent for marketplace sentiment, perchance starring to a breach beneath the important $30,000 enactment level.

Despite the archetypal bullish surge triggered by the spot Bitcoin exchange-traded money (ETF) requests, the caller macroeconomic information has not been favorable for risk-on assets.

Analyzing marketplace sentiment is important successful assessing the chances of Bitcoin (BTC) holding supra $30,000 by July 14. This level acts arsenic a threshold that could supply bears with a cleanable accidental to nett up to $120 cardinal done the play enactment expiry.

Falling U.S. ostentation is detrimental to Bitcoin successful the abbreviated term

In June, the Consumer Price Index successful the United States registered astatine 3.0%, the lowest level since March 2021. This was chiefly owed to a 16.7% diminution successful the vigor index. While this indicates a slowdown successful inflation, it remains supra the Federal Reserve’s people of 2%, which is detrimental to Bitcoin, arsenic higher involvement rates incentivize investors to pivot into fixed-income investments.

One could reason that, successful the abbreviated term, the lowering of ostentation reflects a palmy involution by the Fed and could beryllium viewed arsenic a affirmative origin for Bitcoin’s bullish momentum. However, connected July 12, the U.S. Dollar Index, which measures the dollar’s spot against large overseas currencies, reached its lowest level successful 14 months.

In essence, investors’ assurance successful the Fed’s quality to forestall a recession seems to beryllium waning. Wharton prof Jeremy Siegel suggested that the U.S. system is “progressing smoothly,” with consumers seemingly unaffected by higher borrowing costs. However, Siegel believes that consumers are presently utilizing the past of their currency reserves for question and enjoying the summer.

ETF support likelihood decreased aft remarks from the SEC

The astir compelling statement for the bulls to enactment further gains and prolong Bitcoin's trading terms supra $31,000 connected July 14 lies successful the imaginable support of the spot ETF. However, caller statements by Gary Gensler, seat of the U.S. Securities and Exchange Commission (SEC), person been unfavorable.

Gensler noted connected July 12 that crypto exchanges often connection conflicting services, including trading straight against their ain clients. Furthermore, helium cautioned astir the constricted hazard monitoring practices employed by crypto platforms, leaving them susceptible to marketplace manipulation, specified arsenic lavation trading.

Over the years, the SEC has rejected aggregate requests for spot Bitcoin ETFs, citing important pricing occurring connected unregulated trading platforms. The regulator has besides expressed concerns astir the quality of ETF providers to support investors from fraudulent and manipulative acts.

Bearish instruments were outnumbered but amended positioned

Bitcoin’s terms traded supra $31,000 connected July 4, fueling bullish bets by traders utilizing options contracts. Another failed effort to interruption the absorption connected July 6 explains wherefore bulls person concentrated their bets connected Bitcoin prices trading supra $31,000.

Deribit Bitcoin options aggregate unfastened involvement for July 14. Source: Deribit

The 0.53 put-to-call ratio reflects the quality successful unfastened involvement betwixt the $470 cardinal telephone (buy) options and the $250 cardinal enactment (sell) options. However, the result volition beryllium little than the $720 cardinal full unfastened involvement since the bulls were overconfident.

For example, if Bitcoin’s terms trades astatine $30,500 astatine 8:00 americium UTC connected July 14, lone $30 cardinal worthy of telephone options volition beryllium accounted for. This favoritism arises from the information that the close to acquisition Bitcoin astatine $31,000 oregon $32,000 becomes invalid if BTC trades beneath those levels upon expiration.

Related: First Bitcoin futures declaration debuts successful Argentina

Bitcoin bears tin flip the tables and container a $120 cardinal profit

Below are the 4 astir apt scenarios based connected the existent terms action. The fig of options contracts disposable connected July 14 for telephone (buy) and enactment (sell) instruments varies depending connected the expiration price. The imbalance favoring each broadside constitutes the theoretical profit:

• Between $28,000 and $30,000: 200 calls vs. 4,100 puts. The nett effect favors the enactment (sell) instruments by $120 million.
• Between $30,000 and $31,000: 1,000 calls vs. 1,100 puts. The nett effect is balanced betwixt the telephone and enactment instruments.
• Between $31,000 and $32,000: 4,200 calls vs. 200 puts. The nett effect favors the telephone (buy) instruments by $125 million.
• Between $32,000 and $33,000: 6,400 calls vs. 0 puts. The nett effect favors the telephone (buy) instruments by $210 million.

Taking into relationship the latest macroeconomic information that supports much involvement complaint hikes and Gensler’s antagonistic comments astir exchanges’ quality to supply the ground for a spot Bitcoin ETF approval, bears person an accidental to interruption beneath the $30,000 terms enactment and unafraid a $120 cardinal nett during the upcoming play options expiry.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.