Fed pauses interest rates, but Bitcoin options data still points to BTC price downside

Still, that does not explain why financiers have been flocking to tech business but preventing Bitcoin (BTC), as depicted by the previous two-month performance.Eight consecutive weeks of crypto fund outflowsAccording to CoinShares most current “Digital Asset Fund Flows Report,” the sectors investment product outflows amounted to $88 million in the week ending on June 10. Bitcoin choices aggregate open interest for June 16. If Bitcoins cost stays near $26,000 at 8:00 am UTC on June 16, just $27 million worth of these call (buy) alternatives will be readily available. This distinction occurs because the right to purchase Bitcoin at $27,000 or $28,000 is worthless if BTC trades below that level on expiry.Related: Bitcoin far larger than Binance or Coinbase, states Jan3 CEO: BTC Prague 2023Bulls require Bitcoin cost at $26,500 to prevent a $100 million lossBelow are the three most likely situations based on the present rate action.

Bitcoins cost has been pinned listed below $26,300 considering that June 10, reflecting a 14.8% correction in two months. The Nasdaq tech stock market index acquired 13.6% in the same period, indicating that investors are not precisely running away to the security of money and short-term financial obligation. The demand for United States federal government bonds has actually been declining for the previous six weeks.U.S. 2-year federal government bond yield. Source: TradingViewThe yield on two-year U.S. Treasurys, for instance, increased from 3.80% on May 4 to 4.68% on June 14. Lower need for financial obligation instruments increases payouts, resulting in a higher yield. If the investor believes that inflation will continue above target, the propensity is for those participants to demand a greater yield when trading bonds.The U.S. Treasury is set to issue more than $850 billion in brand-new bills in between June and September. As extra financial obligation issuance tends to cause greater yields, the marketplace anticipates increased loaning expenses for families and organizations. Still, that does not discuss why investors have been flocking to tech companies but preventing Bitcoin (BTC), as illustrated by the past two-month performance.Eight successive weeks of crypto fund outflowsAccording to CoinShares most current “Digital Asset Fund Flows Report,” the sectors financial investment product outflows totaled up to $88 million in the week ending on June 10. The significant drawdown added to the ongoing eight-week streak of outflows, which now total $417 million.The eight-week cumulative outflows for Bitcoin reached $254 million, representing around 1.2% of the total assets under management. Experts at CoinShares have attributed this pattern to monetary policy factors to consider, as rate of interest hikes show no signs of decreasing, triggering investors to stay cautious.Bitcoin has been trying to recover the $27,500 assistance for the past 2 weeks, however that may be more difficult than anticipated provided the upcoming $600 million weekly choices expiration on June 16. A short Bitcoin pump above $27,000 made bulls giddyIt deserves keeping in mind that the actual open interest for the options expiry will be lower since bulls concentrated their bets above $27,000. These traders likely got exceedingly positive after Bitcoins cost gained 8% on June 6, eliminating the losses that drove BTC down to $25,400. Bitcoin options aggregate open interest for June 16. Source: DeribitThe 0.73 put-to-call ratio reflects the imbalance in between the $350 million in call (buy) open interest and the $250 million in put (sell) options. If Bitcoins rate remains near $26,000 at 8:00 am UTC on June 16, just $27 million worth of these call (buy) choices will be available. This distinction occurs because the right to purchase Bitcoin at $27,000 or $28,000 is useless if BTC trades listed below that level on expiry.Related: Bitcoin far larger than Binance or Coinbase, says Jan3 CEO: BTC Prague 2023Bulls need Bitcoin cost at $26,500 to avoid a $100 million lossBelow are the 3 most likely situations based on the current price action. The number of alternatives contracts readily available on June 16 for call (bull) and put (bear) instruments varies depending upon the expiration price.The imbalance preferring each side constitutes the theoretical earnings: Between $24,000 and $25,000: 0 calls vs. 6,100 puts. Bears remain in total control, profiting $145 million.Between $25,000 and $26,500: 1,000 calls vs. 4,400 puts. The net result favors the put (sell) instruments by $100 million.Between $26,500 and $27,000: 2,200 calls vs. 2,800 puts. The net outcome is well balanced in between call and put instruments.This unrefined estimate thinks about the call choices utilized in bullish bets and the put choices solely in neutral-to-bearish trades. This oversimplification overlooks more complicated financial investment strategies.Still, traders should beware as the bears are presently in a much better position for Fridays weekly alternatives expiry, favoring unfavorable price relocations. Thus, an eventual sharp correction listed below $25,000 ought to not be discarded.This article is for general details purposes and is not meant to be and need to not be taken as legal or investment advice. The thoughts, views, and opinions revealed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This short article does not consist of investment advice or suggestions. Every financial investment and trading move includes threat, and readers should perform their own research when making a choice.

Other Questions People Ask

What impact does the Fed's pause on interest rates have on Bitcoin prices?

The Fed's decision to pause interest rates may create a more favorable environment for risk assets, but Bitcoin's price has not reflected this optimism. Despite the pause, Bitcoin has experienced significant outflows and a price correction, indicating that investors remain cautious. The current options data suggests that if Bitcoin remains below certain thresholds, it could lead to further downside pressure on its price.

How do Bitcoin options data indicate potential price downside despite the Fed's actions?

Bitcoin options data reveal a concerning trend, with a low amount of call options available if BTC trades below $27,000. This situation suggests that traders are not confident in a price recovery, as the right to purchase Bitcoin at higher levels becomes worthless. The imbalance in put-to-call ratios further highlights the bearish sentiment among traders, indicating potential downside risks for Bitcoin prices.

Why are investors flocking to tech stocks while avoiding Bitcoin?

Investors have shown a preference for tech stocks over Bitcoin, likely due to the recent performance of these sectors amid rising interest rates. While the Nasdaq index has gained significantly, Bitcoin has faced eight consecutive weeks of outflows, reflecting a lack of confidence in its price stability. This divergence suggests that investors are seeking more reliable returns in tech rather than the volatility associated with Bitcoin.

What scenarios could lead to significant losses for Bitcoin bulls?

Bitcoin bulls face potential losses if the price remains below $26,500, as indicated by the options data. If BTC fails to recover and trades within certain ranges, it could result in a cumulative loss exceeding $100 million for bullish positions. The upcoming options expiration adds pressure, as bears currently hold a stronger position, making it crucial for bulls to act quickly to avoid further declines.

How does the current economic climate affect Bitcoin investment strategies?

The current economic climate, characterized by rising yields on U.S. Treasuries and cautious monetary policy, is influencing Bitcoin investment strategies. Investors are wary of committing to Bitcoin amid ongoing interest rate hikes, leading to significant outflows from crypto funds. As a result, traders may need to reassess their strategies and consider the implications of macroeconomic factors on Bitcoin's price trajectory.