Bitcoin’s (BTC) price has been trading above $22,500 for 12 days. Of course, this situation can change even if Federal Reserve chair Jerome Powell issues positive statements about the economy in today’s post-FOMC presser.
Even if the decision matches the market consensus, the post-meeting statement should be investors’ primary area of focus. Specific areas to focus on would be clues for the next meeting in March.
Troubling news for the largest stablecoin Tether (USDT), could also cause a meaningful impact after a Celsius bankruptcy examiner report showed that “Tether’s exposure eventually grew to over $2 billion” in Sep. 2021. However, it is unclear if iFinex — Tether’s issuer — suffered any losses. iFinex CTO Paolo Ardoino denied exposure to Celsius and suggested that the examiner had “mixed up” prepositions in the report.
Is a strong correction in stock market ahead?
Legendary portfolio manager Michael Burry, known for being one of the most vocal critics of the subprime mortgage crisis in 2007 to 2008, posted a short note on Twitter on Feb. 1, suggesting that investors “sell.”
While the message lacks a supporting thesis, one could conclude that Burry expects a meaningful correction in traditional markets. Considering the 40-day correlation between Bitcoin and the S&P 500 index at 75%, the odds of a BTC price retrace become evident.
Consequently, this week’s Feb. 3, $1 billion BTC options expiry can go either way because bears can still flip the tables as the tide currently favors the bulls.
Bitcoin bears were caught entirely off-guard
The open interest for the Feb. 3 options expiry is $1 billion, but the actual figure will be lower since bears were caught by surprise after the 9.6% rally between Jan. 20 and Jan. 21.
The 1.61 call-to-put ratio reflects the imbalance between the $640 million call (buy) open interest and the $400 million put (sell) options.
If Bitcoin price remains above $23,000 at 8:00 am UTC on Feb. 3, less than $7 million worth of these put (sell) options will be available. This difference happens because the right to sell Bitcoin at $22,000 or $23,000 is useless if BTC trades above that level on expiry.
Related: Retail giant Pick n Pay to accept Bitcoin in 1,628 stores across South Africa
$23,000 Bitcoin would give bulls a $180 million profit
Below are the three most likely scenarios based on the current price action. The number of options contracts available on…
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