Bitcoin’s recent price increase may be attributed to various factors, including the Federal Reserve and the United States Treasury’s extraordinary $25 billion funding, which reduced banks’ systemic risks, and the shutdown of Silicon Valley Bank by the California Department of Financial Protection and Innovation.
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SVB’s downfall had a direct impact on the cryptocurrency market as it held a $3.3 billion deposit from Circle’s USD Coin USDC stablecoin reserves. Furthermore, a drop in commodity prices, particularly for oil, could impact cryptocurrencies.
The $1.2 billion Bitcoin weekly options expiry on March 17 will almost certainly benefit bulls, as bears have concentrated their bets on Bitcoin trading below $23,500. The expected outcome, however, is likely to be much lower than the $1.2 billion open interest, as bears were caught off guard when Bitcoin’s price surged above $23,000 on March 13.
There are four most likely scenarios based on current price action, with bulls holding a significant advantage in all four. This rough estimate considers only call options in bullish bets and put options in neutral-to-bearish trades, but it excludes more complex investment strategies.
To significantly reduce their losses, Bitcoin bears must push the price below $24,000 on March 17, but they have less margin to apply negative pressure given the $240 million liquidation in leveraged short contracts using futures between March 12 and 15.
In conclusion, Bitcoin bulls are well positioned to profit up to $440 million when weekly options expire on March 17, and bears have concentrated their bets on Bitcoin trading below $23,500, but their losses could be significant. The recent price increase could be attributed to various factors, but a drop in commodity prices, particularly for oil, could impact cryptocurrencies.