3 - 5 minute read
The Bitcoin market has continued to demonstrate resilience in the face of negative market indicators, with the cryptocurrency holding its $30,000 support after lower-than-expected U.S. Consumer Price Index (CPI) data was released on April 12. Amidst concern surrounding a potential economic downturn, investors have moved away from the focus on inflation, and the results demonstrate that the driving force behind Bitcoin’s rally is not solely due to inflationary pressure.
According to recent data, several warning signs of a macroeconomic downturn have emerged. The ISM Purchasing Managers Index data fell to its lowest level since May 2020, indicating an economic contraction. Furthermore, the most recent Federal Reserve documents imply that the aftermath of the U.S. banking crisis is likely to push the economy into a “mild recession” later this year. Along with reports that commercial real estate prices fell 1.6% in February, the most since the 2008 financial crisis, these indicate the severity of the economic difficulties that businesses are currently facing.
Regardless of the catalyst behind Bitcoin’s 50% rally between March 11 and April 11, the cryptocurrency has demonstrated resilience to FUD, playing the waiting game as regulatory agencies have filed lawsuits against crypto platforms such as Coinbase and Binance. And by holding the $30,000 support, Bitcoin has demonstrated that the positive momentum can continue, regardless of whether inflation remains above 5%. With bullish sentiment continuing to strengthen, traders await the results of the April 14 open interest for BTC options expiry, which currently stands at $950 million, with $490 million in call (buy) options and $460 million in put (sell) options.
As bulls reinforce the $30,000 support, bears may be rethinking their positions in the market as they have been caught off-guard with less than 7% of their bets exceeding $29,000. With investment and trading moves always involving risks, assessment of the potential impact of recent market movements becomes imperative for traders.
- Between $28,000 and $29,000: 2,600 calls vs. 1,800 puts. The net result is balanced between call and put options.
- Between $29,000 and $30,000: 6,700 calls vs.500 puts. The net result favors the call (buy) instruments by $110 million.
- Between $30,000 and $30,500: 8,500 calls vs. 200 puts. Bulls increase their advantage to $250 million.
- Between $30,500 and $31,500: 11,300 calls vs. 100 puts. Bulls’ advantage increases to $350 million.
The Bottom Line
With the Federal Reserve’s interest rate hikes of 0.10% to 4.85%, the impact on the financial sector has left the markets fragile, and there is concern that the economy may be facing a mild recession later this year. While Bitcoin has demonstrated resilience to negative market indicators, a bearish sentiment may continue to grow if the bear’s projections are realized. Meanwhile, bullish sentiment continues to strengthen, with investors looking to push beyond $30,500, and as traders await the results of the April 14 open interest for BTC options expiry.