Bitcoin Shakes Off the Bears and Aims for $20,000 By End Of Year


Bitcoin remains rangebound, hovering around its annual lows, with some short-term bullish momentum. The cryptocurrency suffered amid the collapse of the FTX and the subsequent contagion, but market participants seem more optimistic about potential profits.

As of this writing, Bitcoin has returned to yesterday’s highs. The BTC price is trading at $16,500 with sideways movement across the board. Other cryptocurrencies in the top 10 by market cap show a similar price. XRP remains the best performer in the ranking.

The price of BTC is moving sideways on the daily chart. Source: BTCUSDT Tradingview

Bitcoin Sentiment Improves On The Derivatives Sector

Data from the Options platform Deribit indicates that the change of sentiment affects this sector. The collapse of FTX and the uncertainty surrounding other crypto companies, such as Digital Currency Group (DCG) and crypto lender Genesis, kept the market on its toes.

The latter company has stopped its customers’ withdrawal requests, and it is looking to raise emergency capital to resume operations. According to the rumors that circulated last week, the parent company of Genesis DCG could be affected.

The company denied the speculations and reaffirmed its long-term intentions to remain in the industry. As a result, the crypto market rebounded as investor confidence improved. In addition, the US Federal Reserve suggests a possible pivot.

These two elements support the bullish momentum. Deribit noted that bulls took advantage of last week’s price drop to pile up Calls (buy orders) on the cheap.

Optimistic investors are acquiring calls with strike prices above $17,000, $18,000 and $19,000 through December. In other words, the options market is betting on Bitcoin, trending higher until the end of the year.

Deribit noted the following about Implied Volatility (IV), a metric affected by recent events. The metric is returning to normal levels suggesting that the market is finally absorbing any risk associated with FTX: However, options with close expiration dates (December 2nd) could decrease in value due to the low trading volume weekend.

(…) the news feed ban also allowed for an implicit willingness to backtrack from a high-tension pullback a few days ago, to a more normal contango term structure.

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The implied volatility of BTC Options decreases after the collapse of FTX. Source: Deribit

A Christmas Miracle?

In the last 24 hours, the options trading site noted, bearish investors unloaded some of their sell (put) contracts. These investors are betting that Bitcoin goes lower than $10,000. There is still some bearish activity targeting the end of 2022.

However, these investors may be covering long points and protecting themselves against possible unexpected events. The current state of the crypto market and the possibility of more contagion make this strategy favorable for long-term investors.

More data provided by Deribit indicates that the sector has nearly $5 billion in total Open Interest (OI). The majority of this metric seems positioned towards the top.

For the December 30 expiration, bullish investors are betting on Bitcoin topping $30,000. The maximum pain scenario, where most options have expired worthless, stands at $20,000.

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BTC Options Open Interest for the December 30 expiration. Source: Deribit



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