Bitcoin’s (BTC), price fluctuated between $46,000 to $52,000 over 26 days. Despite the expiry of $6.1 billion in year-end options, bullish and bearish instruments were equally balanced at $44,000 to $49,000.
It was therefore not surprising that the $47.175 price at 8:01 UTC on December 31 did not bring any changes to the price structure. The bears have not relinquished their control, as the rally of 3% to $48,500 that followed the event was insufficient to sustain itself.
Coinbase: Bitcoin/USD Price Source: TradingView
The 9,925 BTC that left Coinbase within 24 hours could have been interpreted by bulls as a positive trigger. This is because fewer coins are available for newcomers on exchanges. The first week of the new year has seen 18.5% growth for Bitcoin holders, which is consistent with the positive trend over the past four years.
MicroStrategy, a US listed tech company, added 1,914 BTC on December 30 to their balance sheet. The negative side is that regulation continues to press the markets. South Korean exchanges require users verify their third-party addresses in order to comply with Financial Action Task Force (FATF), travel rule guidelines.
Bitcoin was a great 2021.
For the third consecutive year, Bitcoin has outperformed both U.S. stocks as well as gold despite the bearishness of December’s 16% drop. However, this performance was not sufficient to prevent every $48,000 or higher call (buy), option instrument from becoming worthless when the Dec. 31 expiry prices came in lower.
Bitcoin options open interest total for December 31 Source: Coinglass.com
The $4.0 billion call option (buy) is clearly more profitable than the $2.1 billion put (sell). However, the 1.9 call-toput ratio is misleading because of the 16% drop in price from Nov.’s $57,000 closing. This has wiped out most bullish bets. If Bitcoin is trading below $50,000, the call option to buy Bitcoin (call) is worthless.
For Dec. 31 Bitcoin options expiry at 660 million, bulls and bears instruments marched equally. Bears failed to take control, as 85% of their stakes were placed at $47,000 and below. This data partly explains why bulls tried to regain momentum after Dec. 31 expired.
Will 2022’s first week finally see a reversal of the somewhat negative mood that prevailed after the Dec. 3 crash. According to Bitcoin options markets there is no sign that the tide has turned.
Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.