Bitcoin’s bullish hopes for a trend reversal faced a setback due to the $565 million options expiry this week. The price of Bitcoin dropped below $22,400 on March 7 following comments from U.S. Federal Reserve Chair Jerome Powell signaling potential interest rate hikes to combat inflation.
Powell mentioned that interest rates might rise higher than expected due to stronger-than-anticipated economic data. This led to increased expectations of a 50 basis point interest rate hike on March 22, causing pressure on risky assets like stocks, commodities, and Bitcoin.
The upcoming $565 million Bitcoin options expiry on March 10 is likely to favor bears, possibly aggravated by other negative events in the crypto market.
## Silk Road and Mt. Gox Bitcoin Activity
The movement of confiscated wallets linked to U.S. law enforcement seizures on March 8 affected Bitcoin prices. Over 50,000 Bitcoins worth $1.1 billion were transferred, with 9,860 BTC sent to Coinbase, raising concerns about potential market sell-offs. These funds were associated with Silk Road, a darknet marketplace, seized by authorities in 2021.
Creditors of Mt. Gox, a defunct crypto exchange, have until March 10 to select their compensation option as part of the 2018 rehabilitation plan, with payments possibly taking years to complete.
These events contributed to Bitcoin’s drop to $22,000 on March 8, reinforcing bearish sentiment for the options expiry.
## Bearish Outcome Expected
With $565 million in open options interest on March 10, bulls heavily bet on Bitcoin trading above $23,000, but the actual outcome might be lower due to unexpected price movements. The imbalance in call (buy) and put (sell) options suggests a likely advantage for bears, especially if Bitcoin remains below $23,000 at the expiry.
### Likely Outcomes Favor Bears
1. Between $20,000 and $21,000: 0 calls vs. 7,200 puts favoring bear instruments by $150 million.
2. Between $21,000 and $22,000: 100 calls vs. 5,000 puts favoring bear instruments by $105 million.
3. Between $22,000 and $23,000: 1,400 calls vs. 1,900 puts, giving bears a slight edge with a profit of $55 million.
4. Between $23,000 and $24,000: 4,600 calls vs. 600 puts favoring bull instruments by $95 million.
The article concludes that bearish outcomes are more likely given the current market conditions and negative news surrounding Mt. Gox and Silk Road. It emphasizes that investment decisions involve risks, urging readers to conduct their research and seek professional advice.
**Disclaimer:** The article does not provide investment advice, and the opinions expressed are the author’s own and may not represent those of Cointelegraph. The image source is Andreas Bendig/Shutterstock.
