Bitcoin Gets Fresh Start After Flush Of Options Open Interest

Bitcoin began 2022 in a completely different direction than most traders expected. For the most part, Q4 was a sideways period for Bitcoin. The market cap of the first crypto seems to suggest that there is more volatility.

Read Related Article: Bitcoin breaks $51k again as 20k BTC flows out of Exchanges| Bitcoin Breaks $51k Again As 20k BTC Flows Out Of Exchanges

Bitcoin traded at $46,803 as of press time. There has been sideways movement over the past 24 hours. BTC’s price returned to its current levels after a rejection around the $50,000 area as 2021 came to an end.

Bitcoin BTC BTCUSD
BTC is moving in the opposite direction on the 4-hour chart. Source: BTCSUD Tradingview

Data from Material Indicators shows strong support below Bitcoin’s current price as $10 million in bids order sit around $45,000 with an additional $36 million distribute between $44,000, $43,000, and $42,000. These levels could become the bulls’ final line of defense in case of further downside.

Above Bitcoin’s current price there is no significant resistance until $59,000 which records $13 million in ask orders. This doesn’t imply BTC will move straight in that direction as buyers still need to display conviction and hold the aforementioned support levels.

Bitcoin BTC BTCUSD FC
BTC Price (blue Line) and Support Levels (in Yellow Below the Price) for short timeframes. Source: Material Indicators

Arcane Research has reported that Bitcoin options for derivatives have been reset. On December 31, $5.8 BTC options were expired. This is one of the most significant expiry events that led to an estimated 47.8% decrease in Open Interest for the sector. Arcane Research claims the following:

This (decline in OI) could be circumstantial, but it could also be caused by the market structure with options expiries as well as futures expiry (…)

The research firm also claimed that most of the options with far out of the money bullish strikes ended 2021 “worthless”. The options market has been a great part of the dynamics for the BTC’s price action in the last 2 years and, if history repeats, could hint at what’s next for the cryptocurrency in Q1, 2022. Arcane Research stated:

Options market may be able to help anchor the BTC price. The bitcoin price saw significant returns over the two-month expiry period. However, the returns were negative in the second.

New Year, New Market Dynamics for Bitcoin The Cost of Adoption

Bitcoin might be trying to fulfill the needs of the poor at $42,000 on December 3. Analyst Justin Bennet claimedBTC’s bullish momentum has been reestablished after it experienced similar downtrends in the past.

Bitcoin BTC BTCUSD
Source: Justin Bennett via Twitter

Bennet believes BTC’s price action can no longer be classified as only bull v. bear market. On the contrary, the analyst thinks there are more “gray areas” due to the participation of new players and institutions.

You may also like these related readings| Bitcoin trapping makes the market cozier BTC is Gearing up for a Short Squeeze

John Bollinger seems to have a similar view on potential market changes. Bollinger, via Twitter said:

Here are some thoughts about bitcoin. Be careful about what you want: Everybody wants wide adoption, options and listed futures. All that was possible, and even more thanks to the burgeoning regulatory. Problem is, these changes have fundamentally changed the nature of trading.

Get more Crypto News at CFX Magazine