The cryptocurrency market is facing regulatory concerns, and the upcoming BTC options expiry could significantly impact Bitcoin’s price, potentially pushing it under $26,000. After failing to retest the $27,400 resistance on June 6, Bitcoin’s price lost momentum, indicating that investors are becoming less confident due to recent regulatory actions by the United States Securities and Exchange Commission (SEC) against Binance and Coinbase. These exchanges face multiple lawsuits, including failure to register as licensed brokers and offering unregistered securities.
Critics argue that the SEC is trying to circumvent formal rulemaking processes and deny public engagement. Blockchain Association CEO Kristin Smith believes the SEC’s actions are overreaching, while Insider Intelligence crypto analyst Will Paige suggests that the SEC intends to police the space through enforcement in the absence of a regulatory framework. Investors are hoping that the U.S. Financial Services Committee hearing scheduled for June 13 will provide some clarity.
The cryptocurrency space can function without crypto-banks, as evidenced by the sudden increase in decentralized finance volumes. The median trading volume across the top three decentralized exchanges (DEXs) jumped 444% between June 5 and June 7. Meanwhile, net outflows on Binance reached $778 million, the difference between the value of assets entering and exiting the exchange.
Bitcoin has been trying to reclaim the $27,000 support, but this may prove difficult given the upcoming $670 million weekly options expiry on June 9. The negative news flow has caught bulls by surprise. The actual open interest for the June 9 expiry will be lower since bulls concentrated their wagers above $27,000. These traders got excessively optimistic after Bitcoin’s price gained 9% between May 25 and May 29, testing the $28,000 resistance.
The 0.63 put-to-call ratio reflects the imbalance between the $410 million in call (buy) open interest and the $260 million in put (sell) options. However, if Bitcoin’s price remains near $26,500 at 8:00 am UTC on June 9, only $38 million worth of these call (buy) options will be available. This difference happens because the right to buy Bitcoin at $27,000 or $28,000 is useless if BTC trades below that level on expiry.
The most likely scenarios based on the current price action are as follows:
– Between $25,000 and $26,000: 100 calls vs. 5,100 puts. Bears in total control, profiting $125 million.
– Between $26,000 and $27,000: 1,500 calls vs. 3,900 puts. The net result favors the put (sell) instruments by $65 million.
– Between $27,000 and $28,000: 4,200 calls vs. 1,300 puts. The net result favors the call (bull) instruments by $80 million.
– Between $28,000 and $29,000: 8,700 calls vs. 700 puts. The net result favors call (bull) instruments by $225 million.
This crude estimate considers the put options used in bearish bets and the call options exclusively in neutral-to-bullish trades. This oversimplification disregards more complex investment strategies.
With Bitcoin longs using futures contracts being liquidated to the tune of $100 million on June 5, bulls might have less margin required to try pumping the BTC price above the $27,000 mark. Consequently, bears seem closer to scoring a decent profit on Friday’s options expiry.
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