Bitcoin as of writing is at: $9200. A big event today will likely change all of that.
It mentions factors selling pressure from miners, an extended period of low volatility, and repeated rejection of $10,000 levels.
But the main culprit for the 7% plunge comes as $55 million worth of long futures contracts were liquidated on BitMEX.
Today, every long price option will be liquidated. What does that mean?
The bitcoin price, up around 30% so far this year, has been treading water at around $9,400 since it briefly moved above $10,000 earlier this month.
According to Forbes, Bitcoin traders and investors are bracing for more than 100,000 bitcoin options totaling $930 million to expire on June 26, today, or nearly 70% of bitcoin’s entire open interest.
“A bout of price volatility could happen with previous large expiries causing the market to “bounce quite aggressively” and the size of the bitcoin open interest market recently soaring,” Forbes contributor, Billy Bambrough, said.
Bitcoin open interest has climbed to $1.3 billion, double what it was just a couple of months ago, according to data from bitcoin and crypto analytics provider Skew.
The split between bullish and bearish options is currently fairly neutral, though, but 75% of CME contracts are calling bitcoin at $11,000 and higher.
“If markets react very negatively towards the increased Covid-19 cases, we may see more panic which could also pull bitcoin lower.”
Meanwhile, despite a surge in bitcoin options interest, most bitcoin buyers are treating it as digital gold, preferring to hold bitcoin for the long term.
Bitcoin post pandemic
In a recent interview with Insidebitcoins.com, Mode Banking Chief Product Officer Janis Legler has explained how a change in the investor mindset will affect Bitcoin after the coronavirus pandemic. According to Legler, the shift in mindset is due to the US stock market sell-off as a result of the pandemic.
According to Legler: “We believe that the rippling effects of the coronavirus pandemic are going to have a long-lasting effect on our financial landscape and change the way we use money. The crisis… could usher in the beginning of a new era where diversification of asset exposure and wealth protection are more important than ever for retail investors and institutional players alike.”
With Central Bank Digital Currencies (CBDCs) gaining popularity, Legler noted the currency can offer a solution to problems like payment efficiency, transaction security, and financial inclusion.
He believes that CBDCs might not offer a challenge to Bitcoin dominance in either the short or long term within the digital asset markets.
Recently high profile investor Paul Tudor Jones advocated the crypto space in the current environment saying “Bitcoin reminds me of gold when I first got into the business in 1976”.
Gold had a very strong bull run in the 1970s.
Giles Coghlan, HYCM’s Chief Currency Analyst: “Cryptocurrencies popularity looks set to grow as investors look to hedge deflationary risk by keeping some of their portfolios in the crypto space. This is why we are delighted to announce the expansion of our cryptocurrency products today.”
ICOs are back?
Initial Coin Offerings (ICOs) used by startups to launch a new coin, servie or app thrived when Bitcoin started to become popular in 2016. ICOs’ own popularity came to a screeching halt after a series of scams tarnished their reputation.
But did they ever stop? A new report and data gathered by AksjeBloggen, the five largest Initial Coin Offerings reached $7.7bn in total funding. With nearly $4.2bn in the value of raised funds or 55% of that amount, the blockchain platform EOSIO represents the world’s largest ICO.
Statistics show that 5,725 ICOs have been created since 2014, with a total of nearly $65bn raised. Analyzed by geography, the US represents the leading country with 717 ICOs and $7.3bn in total funding. Singapore ranked second with 587 ICOs and $2.5bn in the total value of raised funds. The UK follows with 514 Initial Coin Offerings and $1.5bn in the total funding.