The price of bitcoin has pulled back below the $43,000 mark, as multiple factors exacerbated a bearish market sentiment on Monday.
The world’s largest cryptocurrency by market capitalization decreased by over 0.5% in the past 24 hours to $42,676 at 12:00 p.m. ET, according to The Block’s Price Page.
The price action caused the liquidation of over $75 million of cryptocurrency long positions, according to Coinglass data. In the past 24 hours, liquidated bitcoin leveraged positions spiked to almost $30 million, with over $18 million of these being longs.
The price of bitcoin fell below the $43,000 mark on Monday. Image: The Block’s Price Page.
Genesis files to sell Grayscale assets
The price movement comes as bankrupt crypto lender Genesis Global Capital on Saturday filed a new motion with the U.S. Bankruptcy Court in the Southern District of New York seeking authorization to sell approximately $1.6 billion in trust assets.
According to the filing, the assets held by Genesis, a subsidiary of the Digital Currency Group, include shares of Grayscale Bitcoin Trust worth about $1.4 billion, shares of Grayscale Ethereum Trust worth about $165 million, and shares of Grayscale Ethereum Classic Trust worth about $38 million.
The company also filed a separate motion to shorten the relevant deadlines so that the sale motion could be heard at the bankruptcy court’s next hearing on Feb. 8.
Federal Reserve signals rate cut delay
The BTC price action comes as the wider market digests signals from the U.S. Federal Reserve that any potential rate-cutting cycle will be delayed until May 2024, or after.
On Sunday, Federal Reserve Chair Jerome Powell ruled out an earlier rate cut in 2024 in an interview with CBS’ 60 Minutes.
Powell stated that a rate cut in March, as anticipated by Wall Street, is “not likely” to happen.
“We’ve said that we want to be more confident that inflation is moving down to 2%,” Powell said in the interview. “I think it’s not likely that this committee will reach that level of confidence in time for the March meeting, which is in seven weeks.”
Bitcoin call options concentrate on $50,000
However, metrics from derivative markets continue to indicate that bullish sentiment for BTC in the medium term is being sustained. Bitcoin active options data ahead of the next end-of-month expiry date on Feb. 23 shows the largest cluster of contracts outstanding are calls with a strike price of $50,000.
According to Deribit data, there are over 3,899 contracts outstanding for calls at the strike price of $50,000, with a notional value of over $166 million.
Bitcoin put-call spread for the February end-of-month expiry shows a concentration of calls at $50,000. Image: Deribit.
In options trading, a call option gives the holder the right, but not the obligation, to buy the underlying asset at a specified price before or on the expiration date.
The fact that there is a large cohort of call options at $50,000 suggests that a considerable number of traders could be anticipating that the price of bitcoin will rise above $50,000 by the end of the February expiration date.
According to Velo Data, in the past 24 hours the derivatives trading skew is focused on options for buying bitcoin at a lower strike price. Charts from data across multiple exchanges show that the largest group of contracts outstanding are for call options at $45,000 for the Feb. 23 expiry.
Bitcoin active options volume. Image: Velo Data.
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