Countdown To Bitcoin ETF 2024 Decision: Traders Employ Hedging Tactics, Bloomberg Unveils
December 22 2023 - 6:00PM
NEWSBTC
As the long-awaited deadline for a positive or negative decision on
spot Bitcoin ETF applications approaches, Bloomberg reports that
the BTC options market is seeing increased hedging activity as
traders prepare for a crucial decision on January 10th. The report
indicates a surge in open interest for put options expiring on Jan.
12, suggesting that market participants are taking steps to
mitigate potential losses in the event of a negative verdict by the
US Securities and Exchange Commission (SEC) regarding these index
funds holding the cryptocurrency. Market Readies For Bitcoin
ETF Verdict The Bloomberg report highlights that the open interest
for put options, which allow holders to sell Bitcoin, has seen a
significant increase for contracts expiring on January 12.
This surge in open interest has resulted in a higher put-to-call
ratio for these specific options compared to contracts with
expiration dates further out from the January 10 deadline.
Related Reading: Solana Flips BNB To Become 4th-Largest Crypto, Is
Ethereum Next As seen in the chart below, the most prominent strike
prices for the put contracts are $44,000, $42,000, and $40,000,
respectively, indicating that put holders could exercise their
options to minimize losses in case of a negative market reaction to
the SEC decision. The put-to-call ratio, considered a measure of
overall market sentiment, stands at 0.67 for the January 12 options
contracts, indicating a more cautious approach among traders.
Ryan Kim, head of derivatives at FalconX, suggests that
leveraged/speculative traders are employing Bitcoin put options to
protect their leveraged longs, anticipating significant price
movements in either direction. The higher put-call ratio for
January 12 options further reflects the market’s desire for
protection against a potential negative decision. The surge in open
interest for put options expiring on January 12 indicates a growing
need for protection in case of an unfavorable ruling. While
Bitcoin’s rally has softened the impact of its 2022 decline, market
expectations for ETF approval may already be priced in, posing
potential risks for the market. BTC’s Price Resistance And
Potential Dip Bitcoin has experienced a remarkable rally this
year, with expectations for ETF approval driving its price up by
more than 60% since mid-October. However, the Bloomberg
report suggests that the surge in demand for the anticipated ETFs
may already be factored into the token’s price, potentially
exposing the market to a “sell the news” scenario in the second
week of January. Related Reading: Social Frenzy: Stacks (STX)
Hits 8-Month High, But It Unveiled An Intriguing Twist Furthermore,
QCP Capital, a Singapore-based crypto asset trading firm, predicts
topside resistance for Bitcoin in the range of $45,000 to $48,500
and a possible retracement to $36,000 levels before the uptrend
resumes. Bitcoin is currently trading at $43,400, experiencing a 1%
decline over the past 24 hours. Over the past 14 days, the
cryptocurrency has shown a sideways price movement with a slight
decrease of 0.4%. Given Bitcoin’s well-known volatility, it
remains uncertain how the market will react as the looming decision
and potential catalysts draw near, and how these factors will
impact its price dynamics. However, the upcoming decision is not
the sole catalyst that can potentially drive Bitcoin’s price in
2024. The cryptocurrency is also anticipated to experience a
significant catalyst in April 2024, known as the halving
event. This event has historically resulted in an upward
surge in Bitcoin’s price, and it is predicted to propel the
cryptocurrency beyond its previous all-time high (ATH) of $69,000
throughout the upcoming year. Featured image from Shutterstock,
chart from TradingView.com
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