Bitcoin – the world’s biggest and most popular cryptocurrency by market cap – is shooting back up. At the time of writing, the asset is trading for just over $57,000. This is a huge improvement over the $54,000 it was at a few days ago and the $49,000 per unit it was stuck at early last week.
Bitcoin May Grow Again Soon
For the most part, it was believed that bitcoin would likely continue its bullish patterns into the month of May, though thus far, this period is proving to be far more volatile than analysts thought. Nate Cox – chief investment officer of digital assets at Two Prime – explained in a recent interview:
Bitcoin did not move the way many derivative traders expected this month.
Steve Ehrlich – chief executive of Voyager Digital – echoed this sentiment but commented that this could potentially lead into something bigger. He says that a drop of this sort in the past has usually led to heavily bullish behavior, suggesting that bitcoin could be on a route to reach new all-time highs over the summer. He mentions:
Historically, we have seen prices drop in the days leading up to bitcoin options expiry, only to rebound afterward, confirming the continued bullishness around bitcoin. We can look to the bitcoin options expiry in February as an example. We saw the price lose at around $57,540 on the Monday of the week of expiry and watched it fall steadily to around $46,340 by Friday, February 26, 2021, the day of the expiry. Afterward, we saw the price shoot back up, even breaking the $60,000 mark less than a month later March 13. So, while we experience a price drop in the days leading up to expiry, the bullishness around bitcoin picks the price back up thereafter.
More Expiring Contracts?
As it stands, June is all set to host a new expiry of bitcoin futures contracts. Thus, if Ehrlich’s words have any stamina to them, we could find ourselves trading bitcoin at considerably higher prices a few months from now. In addition, there are more contracts set to expire in June, which could bring BTC to an even stronger position. Justin Chuh – senior trader at digital asset manager Wave Financial – states:
It is interesting to see the next highest open interest is on the June expiry with 54,200 open interest, rather than May with only 35,700 open interest. Market participants may be looking to align themselves with the June quarterly futures contract and use that as price discovery for spot. Also, there seems to be a more even put/ call ratio in June. Usually, we have seen heavier interest in calls [bets that the bitcoin price will rise] and buying puts [bets the price will fall] are expensive, but this may be an early indication that more investors may be worried about downside protection as time goes out.
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Source: Live Bitcoin News