Bitcoin is making gains, though much of the day saw the cryptocurrency in a holding pattern. Meanwhile, a quarter of ether options are expiring in March, meaning traders are making some bets on the first fiscal quarter of 2021.
- Bitcoin (BTC) trading around $36,286 as of 21:00 UTC (4 p.m. ET). Gaining 5.5% over the previous 24 hours.
- Bitcoinâ€™s 24-hour range: $32,463-$36,552 (CoinDesk 20)
- BTC above the 10-hour and 50-hour moving averages on the hourly chart, a bullish signal for market technicians.
Bitcoin was able to recover from a drop in price Wednesday. After going as low as $32,463 around 01:00 UTC (8 p.m. ET Tuesday), it was able to stay in a $34,500-$35,000 range before breaking out to $36,464 before settling at $36,286 as of press time.Â Â
Despite the past few hours of price gains, analysts refer to a day of little price action as a â€œsidewaysâ€� or â€œflatâ€� market. Itâ€™s not clear after so much excitement for the worldâ€™s oldest cryptocurrency in the first few days of 2021 what might happen next for the price, according to Misha Alefirenko, founder of crypto market maker VelvetFormula.Â
â€œI have no clear view at the moment,â€� Alefirenko told CoinDesk. â€œLooks like big guys stepped away to wait and see. The market has to find its own balance.â€�
Bitcoin spot volumes were clearly taking a breather after Mondayâ€™s record-high daily zenith of $13.5 billion for the eight exchanges tracked by the CoinDesk 20. For Wednesday, the tally was at $4 billion as of press time, closer to the past monthâ€™s $3.8 billion daily spot average.
However, Constantin Kogan, partner at crypto investment firm Wave Financial, has a bearish view of the bitcoin market. â€œWe may go even lower to $23,000,â€� Kogan said. Because â€œbuy the dipâ€� is a strategy deployed in the crypto market if digital assets start dumping, prices may eventually find their near-term bottom. â€œThere is a zone from which they (traders) will start to actively buy back,â€� Kogan added.Â
Another chart to note as bitcoinâ€™s price has lifted over 23% so far this year is that of the dollar index (DXY), a measure of the greenbackâ€™s strength versus a basket of other fiat currencies. This time last year, the DXY index price was over 97. So far in 2021, itâ€™s struggling to stay above 90.
Wave Financialâ€™s Kogan also noted there has been a closer, albeit opposite, relationship between United States duckets and bitcoin of late. â€œThe decline in bitcoin Monday occurred simultaneously with the strengthening of the dollar index,â€� he said. â€œAs a result, the two largest currencies â€“ digital and traditional â€“ once again showed an inverse correlation.â€�
Ether options expirations piling up in March
The second-largest cryptocurrency by market capitalization, ether (ETH), was up Wednesday, trading around $1,110 and climbing 2.5% in 24 hours as of 21:00 UTC (4:00 p.m. ET).
The amount of open interest in ether options is heavily favoring the March 21 expiration. That is where 25% of current options open interest are to be found, according to data from aggregator Skew.
â€œMostly itâ€™s rolling,â€� said Vishal Shah, founder of derivatives exchange Alpha5, referring to a strategy where traders â€œroll upâ€� to a higher strike price. And while most strikes are favoring a sub-$800 spot price, the majority of the trades for Wednesday were calls (62%) versus puts (39%).
Shah told CoinDesk the March 21 expiration date pile-up correlates nicely with the end of the fiscal quarter and may explain why itâ€™s taking the lionâ€™s share of ether options open interest. â€œQuarterly expirations are typically larger than monthly, and March is now the nearest quarterly expiry,â€� he said.
Digital assets on the CoinDesk 20 are all green Wednesday. Notable winners as of 21:00 UTC (4:00 p.m. ET):
- Oil was down 0.75%. Price per barrel of West Texas Intermediate crude: $52.86.
- Gold was in the red 0.35% and at $1,848 as of press time.
- The 10-year U.S. Treasury bond yield fell Wednesday dipping to 1.090 and in the red 3.3%.
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