Bitcoin seems to have already factored in the Fed rate hike which had little effect on its price post Wednesday’s announcement. Bitcoin bulls and bears are in for a thought fight ahead of Friday’s options expiry.
Earlier on Tuesday, March 15, Bitcoin (BTC) made a move past $40,000 in a bullish divergence. The world’s largest cryptocurrency has managed to successfully hold these levels and is currently trading 5% up at a price of $41,100. On Wednesday, the Federal Reserve announced its first interest rate hike by 0.25%, the first in four decades. The Fed has already hinted at a few more rate hikes to control the soaring inflation but it seems that Bitcoin (BTC) and the crypto market had already priced this year before the scheduled announcement.
On-chain data provider Santiment reported:
“Bitcoin will now finally be able to react after #JeromePowell & the #FOMC announced their first rate hike since 2018 yesterday. The initial news spike led to a price bounce & #altcoin surge. A good sign that rate hike fear was partially baked in.”
With its recent move, bitcoin has managed to move past its 50-day moving average. However, the 200-day moving average (DMA) of $48,622 is still far enough. The world’s largest crypto has shown strong volatility in the price range of $35,000-$45,000.
As Glassnode reports:
“Liquidation sizes decrease as Bitcoin is squeezed into the $38-$42k price range (B). Long liquidations continue to dominate. The next big move is confirmed once we break the $36-$45k range (A)”.
Bitcoin (BTC) Bulls Can Defend $40,000 Ahead of Friday’s Options Expiry amid the News from Fed
Amid the Bitcoin price volatility in the recent weeks, the situation for the call (bull) and put (bear) instruments has been varying based on the March 18 expiry. To understand why the bulls will prefer holding $40,000 levels for BTC by Friday, understand the below scenario.
- In the price band between $38,000-$40,000, there are 1700 calls and 1300 puts. This smaller gap suggests a balance between the bulls and the bears.
- Similarly, in the price range between $40,000-$41,000, there are 3,200 calls vs. 600 puts. Clearly, the net result is in favor of the bulls by $105 million.
- In the price band between $41,000-$42,000, there are 4,200 calls vs. 300 puts. Thus, the Bitcoin bulls are trying to boost their gains to $160 million.
Bitcoin bears will have to push the BTC price below $40,000 to avoid a $105 million loss. On the other hand, as we explained the bulls can maximize profits to $160 million. It will be interesting to see who holds up the line on March 18.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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