Bitcoin has remained just above the $30K mark, but that could change soon if the bears have their way. The prices have moved in a limited range ($28,700 – $31,300). Two external developments have further clouded investor sentiments; the collapse of the 3rd-largest stablecoin, TerraUSD (UST) and LUNA, and the 4.7% slide in prices of the Nasdaq Composite Stocks on Wednesday.
Recession fears have further affected the upward movement of Bitcoin as retailers in the US reported disappointing figures. Walmart’s stock prices have nose-dived by 17% in 2 days while Target dropped a quarter of its value.
This specter of recession has pushed the S&P500 into a bear grip even as it faces a 20% reduction from its highs. The recent drop in crypto prices has also proved expensive for leverage buyers. Aggregate liquidations touched $457M on May 15-18 at the derivatives exchanges.
Drop Of Bitcoin Price Below $32K Catches Buyers Off Guard
The options expiry open interest on May 20 stands at $640M, but over-optimistic bulls will cause it to be way lower. Buyers were caught unawares by the recent downturn in Bitcoin prices as it slid south of $32,000. Just 20% of call options on May 20 were below that level.
The put-call ratio stood at 0.66 and reflected the clear domination of the $385M sell interest versus the $255M buy option. But if Bitcoin hovers close to $30,000, a maximum of sell bets could turn worthless and reduce the advantage that the bears have
If Bitcoin holds above-$29K at 8:00 UTC on Friday, just $160M of these sell options could be available. The difference is attributed to the fact that the sell option of Bitcoin at $30K is insignificant if trading takes place above that rate on expiry.
A sub-$29,000 level would favor the bear instruments by $190M, while between $29K and $30K would again favor bears by $60M.
A price action between $30K and $32K would favor the bear instruments by $60M.