THE bitcoin ETF applicationsthere selling pressure from BTC miners and the regulatory barriers create a real uncertainty around resistance at $31,000. It remains impassable for the moment and Bitcoin today appreciates 0.25% over 24 hours to $30,800. Moreover, the expiry of 4.7 billion monthly options this June 30 could play a decisive role to determine if the price will hold above $30,000 or can break through the $31,000 level.
Many crypto analysts believe that Bitcoin’s recent break above the $27,000 threshold is a bet made by traders on applications filed for Bitcoin ETFs, by many funds such as BlackRock and ARK. Invest. These SEC filings to build spot Bitcoin ETFs have created a real enthusiasm for tradersmost seeing in these instruments an ability to attract new investors and further democratize Bitcoin.
The market even quickly imagined that the company Grayscale could eventually convert its Grayscale Bitcoin Trust into a Bitcoin ETF. We can therefore imagine that the current rise (and record prices) has been largely supported by traders who believe that the advent of these Bitcoin ETFs will propel even higher the course of cryptocurrency.
Bitcoin’s rise is meeting resistance at $31,000 at the moment
But, on the other hand, the traders who are patient on a falling bitcoin try to take advantage of macroeconomic and regulatory headwindsincluding exchanges that implement more restrictive mandatory procedures of the Know Your Customer (KYC) type. So, on June 28, KuCoin announced an upcoming KYC system upgrade in an effort to increase compliance with global anti-money laundering regulations.
In addition, there are growing concerns about the impact of selling pressure from the Bitcoin mining industry, with the network hash rate reaching 400 exahashes per second. The analysis company Glassnode has thus noticed that BTC miners sent a record percentage of their BTC revenue to trade over the past week, for a $128 million total. Curiously, the move mimics the spikes seen during the 2021 bull run as miners took profits.
Moreover, at the Central Banks Forum held in Portugal, the US Federal Reserve Chairman Jerome Powellwarned that most policymakers expected two more rate hikes this year. Thus, according to the CME’s FedWatch tool, investors are leaning towards an 82% probability that an interest rate increase of 25 basis points will take place on July 26.
All of this information can easily explain why some traders have decided to take their profits, thus limiting the rise in prices. Incidentally, Bitcoin last flirted with the $31,000 level on June 27, but the resistance turned out to be stronger than expected. The correction that followed, bringing the price back towards $30,000, accredits the theory of a market with a narrow short-term trading rangepending new momentum or other defining events for BTC.
4.7 billion dollars of options expiring at the end of June: what impact on the market?
THE total amount of options expiring on June 30 is $4.7 billion, but the figure will actually be lower since bullish traders were betting on price levels at $32,000 or higher. So, with a Bitcoin price close to $30,500, there would be approximately $630 million of call options available. The difference is that options to buy Bitcoin at $31,000 or $32,000 prove useless with BTC trading below that level at the time of option expiration.
The analysis of the distribution of options in progress reveals several possibilities depending on the price of Bitcoin at the time of expiration. In the most probable hypothesis at the moment (a price between $30,000 and $31,000), the balance tilts sharply in favor of call options for an overall differential of $440 million. And, if the price crosses the resistance of $31,000, call options are even more favored, with a differential which then amounts to more than $600 million.
Of course, this projection cannot take into account complex investment strategies, but it gives a good idea of the weight that these options can have on the market at the time of their expiration.
In parallel, potential Bitcoin ETF endorsement cash is under review by the SEC. It is today impossible to determine the timetable for such a decision and it will most likely occur later, without interfering with the expiration of these options. Similarly, its impact is complex to measure, even if it will be largely positive in the medium term for the price of BTC.
In view of the current issues with this month’s options, it is therefore still very likely that traders will support a BTC price above $30,000 today, without however succeeding in making it cross the resistance which is located at $31,000. It will likely take more macro events to get such a bullish momentum in the near future.
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