Cryptocurrencies are trading down today after the dollar index (USDIDX) defended a psychological support level, at 100 points. Bitcoin is trading back near $42,000. The market wasn't supported by the 'bullish' news of Microstrategy (MSTR.US), which bought up Bitcoins worth a total of $6 billion. At the same time, the market is preparing for an all-time record expiration of Ethereum and Bitcoin options worth $11 billion, on Deribit.
- Futures contracts and derivatives based on Bitcoin or Ether may see above-average volatility, including institutional activity at a time when the market is speculating about the possible approval of ETF applications by the SEC, before 10th January 2024. A quarterly 60% rise in the price of BTC and a 43% rise in ETH have kept investors interested in bullish 'in-the-money' option positioning.
- Analysts interviewed by industry program CoinDesk highlighted that according to options market positioning, the maximum pain levels for Bitcoin are currently $33,000 and $1,900 for Ethereum. Both levels seem almost impossible to test at current price levels, and would likely require a huge profit taking. At the same time, in the case of SEC declining spot ETFs in January, we may see some panic and sell-off on crypto market, fueled by mentioned profit-taking pressure.
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Positioning investors in the options market. Maximum Pain Price for Bitcoin is $33,000. Source: Coindesk, Deribit
Solana and Bitcoin charts (M30, H1)
Solana's has stopped declines at the important psychological zone of $100, also supported by the local highs of a week ago, but failed to stay above. A drop to $89 (61.8 Fibonacci retracement of the December 18 upward wave) remains possible, in case Bitcoin approachin the area of $40,000. Source: xStation5
The base support level in the correction scenario for Bitcoin remains the psychological level of $40,000, where we see the 23.6 Fibonacci retracement of the October 2023 upward wave as well as previous price reactions. Source: xStation5
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