December 6, 2022

Bitcoin Bounces as $6.4 B in Options Expire, Institutional Buying Slows Down: What’s Next?

2 min read

The previous few weeks have been hard on crypto bulls, as Bitcoin and the wider crypto market continued to sell off. Given that reaching an all-time-high of $61,500, Bitcoin plunged 16% in a matter of a few weeks, shedding $100 billion in market capitalization. The significant cryptocurrency saw signs of life as Elon Musk’s tweet sent out rates back up to $56,000.

This would prove to not suffice, as Bitcoin continued to plummet, reviewing the $51,000 area. Following a multi-day loss streak, bearish sentiment began to embed in; financiers and speculators began to brace for effect, fearing that the correction was far from over.

Today nevertheless, the marketplace breathed a sigh of a relief as Bitcoin increased 6%, recovering back to $54,000. Tech index NASDAQ likewise pared its weekly losses, rising 1.4% into Friday market close — — helping construct Bitcoin’s intraday momentum.

Record Number of Bitcoin Options Expire: What’s in Store for April?

More significantly however, offering pressure most likely decreased thanks to a record $6.4 billion in alternatives ending earlier today. According to figures from DeriBit, the price expectation for Bitcoin stays higher for April compared to March. With April 30 agreements showing a put/call ratio of 0.80 since press time, investors seem more bullish than before.

What’s intriguing is that a majority of financiers have placed their bets on Bitcoin to end April over $80,000. This particular strike price represents 12.6% of overall open interest (4842 out of 38283), being the most popular call strike rate. On the other side of the trade, the $50,000 put strike rate accounted for 10.1% of overall open interest.

From a glimpse, it’s clear that the alternatives market has actually priced in a bullish sentiment for Bitcoin — — for now. This is clearly subject to change, depending on various elements consisting of drivers, equities market, policies, and more.

Institutional Inflow Continues to Slow: Worrying Sign?

With Bitcoin’s current price action and extreme volatility, many institutions formerly interested were most likely thrown off. According to a report from CoinShares, institutional demand for Bitcoin financial investment products dropped in the latter weeks of March. They saw institutional inflow drop almost 60% in a single week.

Regardless of this, it’s likely that institutional demand will ramp back up as Bitcoin supports. Among New Zealand’s retirement funds recently divulged that Bitcoin represented 5% of its financial investment holdings. Temasek, Singapore’s $306 billion sovereign wealth-fund, also exposed that it had been generating the digital currency given that 2018.

Significant financial investment bank Goldman Sachs has actually also remained bullish on the cryptocurrency, filing to develop their own monetary products tracking Bitcoin. In conclusion, the current drop in institutional inflow is not a distressing sign in the long run. More likely than not, institutional need will ramp back up as Bitcoin’s cost supports.