Bitcoin (BTC) is back in range after a failed attempt to retake previously lost territory, with the likelihood of further casualties. The crypto market has seen weak price action in 2023, but BTC has been significantly more vulnerable than other digital assets.
As of this writing, Bitcoin is trading at $16,800 with sideways movement over the past 24 hours. In the last seven days, BTC records 1% gain. In the same period of time, Ethereum (ETH), Cardano (ADA), Litecoin (LTC) and others have seen gains of 6% to 12%.
BTC price is moving sideways on the daily chart. Source: BTCUSDT trade view
Bitcoin investors hedging their positions?
As the price stagnates in the bitcoin spot market, the derivatives sector could provide more clues as to price expectations. According to a recent report by crypto exchange Deribit, expectations of a spike in volatility due to the new year have eased.
The report claims that market participants were “reluctant” to jump into the current price action due to ambiguity surrounding macroeconomic conditions. Furthermore, the crisis between Gemini and the Digital Currency Group (DCG) further fueled this sentiment.
DCG owns crypto lender Genesis, which owes billions of dollars to Gemini Earn clients. If the first of these companies decides to liquidate one of its products to pay off its debt, the price of bitcoin and others cryptocurrencies likely trending down. Deribit noted:
The options market is refusing any significant directional reaction to the Gemini DCG term and the relatively flat skew across maturities does not signal strong bias.
Implied volatility, a measure of the market’s anticipation of price movements, has declined. The options sector has sold off in the current environment; The report notes some buying action around put (bearish) contracts for February and March.
These contracts could be part of a hedging strategy by prominent players with bitcoin spot positions. If the situation around DCG and Gemini turns positive, the market is likely to trend up.
Additional data provided by Deribit reflects the current state of the market, which is not dominated by any clear direction. As can be seen in the chart below, there is a lot of open interest, mostly call options, around $17,000.
Options expiring Jan. 27 with lots of open interest at $17,000. Source: Deribit
This data suggests that market participants are expecting a sideways price movement until the expiration on January 27th. As already mentioned, the DCG/Gemini situation and macroeconomic developments could change this situation.
Source: Crypto News Deutsch