The price of Bitcoin held on to the $30,000 support level after U.S. Consumer Price Index (CPI) data released on April 12 fell short of expectations. The official inflation rate rose 5 percent in March from a year earlier, slightly below the previous reading of 5.1 percent. That was the lowest level since May 2021, but still well above the Federal Reserve’s (Fed) 2% target.
The data shows that inflation is no longer the driving force behind Bitcoin’s recovery, and investors’ focus has shifted from the impact of inflationary pressures to the potential recession risk after the banking crisis, which shows the fragility of the financial system after the Fed’s 12-month rate hike Tax rates range from 0.10% to 4.85%.
In addition to the bankruptcy of Silicon Valley Bank (SVB) and the government-backed sale of Credit Suisse to UBS, there were several warning signs of a macro recession.
The latest ISM purchasing managers index data fell to the lowest level since May 2020, pointing to a slowing economy. The aftermath of the US banking crisis could push the economy into a “moderate recession” later this year, according to a Federal Reserve document released on April 12. Some have speculated the Fed will delay raising rates because of the crisis, but officials insist more needs to be done to keep inflation in check.
According to Moody’s analysis, commercial real estate prices fell by 1.6% in February, the highest level since the 2008 financial crisis. In addition, the national office building vacancy rate reached 16.5%, which shows the serious economic difficulties companies are currently facing.
Whatever the reason for Bitcoin’s 50% rally between March 11th and April 11th, it has demonstrated resilience ahead of FUD (fear, uncertainty, and doubt), including the SEC on 3 The Wells notice was filed with Coinbase on March 22, and the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance and its CEO Changpeng Zhao on March 27. By holding support at $30,000, Bitcoin is proving that positive momentum can continue regardless of whether inflation remains above 5%.
Bulls dominate when BTC options Row Week be expired
Not everyone is cheering the rally, especially traders using bitcoin options for bearish bets. The April 14 open interest (OI) for BTC options at expiration is $950 million, with $490 million in calls and $460 million in puts. Bears were caught off guard, with less than 7% of bets above $29,000.
Bitcoin options open interest summary for April 14 | Source: CoinGlass
Below are the four most likely scenarios based on current price action. The number of call (buy) and put (put) contracts available for April 14 varies by expiration price. An imbalance in everyone’s favor constitutes a theoretical profit:
- From $28,000 to $29,000: 2,600 puts and 1,800 calls. The end result is a balance between puts and calls.
- From $29,000 to $30,000: 6,700 calls and 500 puts. The end result was in favor of a $110 million call option.
- From $30,000 to $30,500: 8,500 calls and 200 puts. The bulls increased their advantage to $250 million.
- From $30,500 to $31,500: 11,300 calls and 100 puts. The bulls’ advantage increases to $350 million.
This rough estimate only considers calls for bullish bets and calls for neutral to bearish trades. However, this oversimplification does not cover more complex investment strategies.
Bears can’t turn the tide
Bulls are expected to push Bitcoin above $30,500 by 3pm (UTC) on April 14, adding another $100 million. Bears, on the other hand, will need to apply pressure to push the price of Bitcoin below $29,000 to balance. However, bears have recently suffered significant losses as $128 million in short futures positions between April 9 and April 11 were forced to liquidate.
With the most likely scenario favoring the bulls, their gains are likely to be used to consolidate the $30,000 support level. Bears are likely to weigh and wait for further action from regulators, as macroeconomic conditions are currently favorable for supply-constrained assets.
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As reported by Cointelegraph