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Bitcoin price loses traction as miner profits drop and spot BTC outflows persist

Bitcoin has lost more than 10% in the past two weeks as fear of a US recession, spot Bitcoin ETF outflows and the threat of miner capitulation grows.

Bitcoin (BTC) price dropped 10% over the 10 days ending on Sept. 3, falling from $64,190 to $57,800. This decline occurred despite the S&P 500 index being just 2% below its all-time high and gold trading only $50 away from its historical peak. While some cryptocurrency investors attribute Bitcoin’s dip to the broader macroeconomic environment, other factors are also pushing its price below $59,000.

Source: DamiDefi

Trader DamiDefi explains that Bitcoin has been influenced by recession concerns in the United States, but that trend is stabilizing as the focus shifts to “monetary policy and the US dollar’s performance.” The “bullish narrative” for Bitcoin going forward will hinge on the expectation of a “looser Federal Reserve policy, [...] such as lowering interest rates.” Essentially, traders anticipate that the US will be compelled to implement expansionary measures to stimulate the economy.

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BTC dominance steadily rising since 2023, is altseason now a relic?

Bitcoin falls under $60K as investors’ global economic slowdown concerns rise

Fear of a global economic recession continues to drive investors away from risk-on assets like Bitcoin.

Bitcoin (BTC) price experienced a 5% gain between Aug. 13 and Aug. 14, reaching $61,791, before quickly reversing the entire move, falling to $58,914 in under two hours. This abrupt downturn occurred after the United States reported an inflation figure that slightly undercut analysts' expectations. The initial price surge was driven by significant announcements concerning spot Bitcoin exchange-traded funds (ETFs) and MicroStrategy (MSTR) holdings, but macroeconomic conditions ultimately proved decisive on Aug. 14.

Goldman Sachs, a leading global financial institution, disclosed new spot Bitcoin ETF holdings totaling $418 million in its 13-F filing, reflecting positions as of June 30. The allocation spanned multiple providers, including BlackRock, Fidelity, Invesco, and Grayscale. While it remains unclear whether these investments were made by external fund managers or Goldman’s internal asset management team, this marks a significant milestone, as the firm oversees $2.81 trillion in assets under management.

Not all asset managers have embraced such investments. According to CNBC, JPMorgan, Bank of America, and Wells Fargo continue to restrict their financial advisors from recommending spot Bitcoin ETFs. Meanwhile, Morgan Stanley, one of the world’s largest wealth management firms, only approved the distribution and sale of spot Bitcoin ETFs through its 15,000 financial advisors as recently as Aug. 7. Consequently, Goldman’s allocation could potentially set a precedent that encourages its competitors to follow suit.

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BTC dominance steadily rising since 2023, is altseason now a relic?

$1.12B in Bitcoin options expire this week, and bulls appear to be at a disadvantage

Commodities rallied as the U.S. Treasury struggled with the banking crisis, but Bitcoin bulls also overplayed their hand in this week’s options expiry.

Bitcoin's (BTC) 43% rally between March 10 and March 20 surprised options traders and this is proven by the minimal14% of the $1.12 billion open interest set to expire on April 7 being placed at $28,000 and higher. 

The positive price movement can be partially attributed to an increase in commodity demand, as investors perceive risks in the central bank's emergency funding programs, as injecting liquidity causes inflationary upward pressure.

According to Urban Angehrn, CEO of the Swiss Financial Market Supervisory Authority (FINMA), if Credit Suisse had not been rescued, "many other Swiss banks would probably have faced a run on deposits." Angehrn added that, "there was a high probability that the resolution of a global systemically important bank would have led to contagion effects and jeopardized financial stability in Switzerland and globally."

Investors' appetite for commodities vastly increased after the U.S. Treasury Department reportedly discussed the possibility of expanding the Federal Deposit Insurance Corporation (FDIC) insurance for bank deposits on March 21. Oil prices measured by the WTI have rallied 23.5% since March 20, and gold broke above $2,000 on April 5 — its highest daily close since Aug. 2020.

An unexpected shockwave on a $33 trillion asset class that was previously thought to be a safe haven for inflation could have benefited the commodity sector as well. Morgan Stanley Wealth Management has issued a warning about the commercial real estate market, predicting trouble with refinancing.

According to the bank's report, the sector has been hard hit by increases in remote work and corporate layoffs, resulting in vacancy rates reaching a 20-year high. As a result, investment bank strategists predict a 40% drop in commercial real estate prices and state that "more than 50% of the $2.9 trillion in commercial mortgages will need to be renegotiated in the next 24 months when new lending rates are likely to be up by 350 to 450 basis points."

Bitcoin bulls may have benefited from increased demand for inflation protection, but some may have squandered the opportunity by placing size bets of $30,000 or higher.

Bulls placed 85% more bets, which did not translate to victory

The weekly BTC options expiry has $1.2 billion in open interest, but the actual figure will be lower because bulls have concentrated their bets on Bitcoin price trading above $29,000.

Bitcoin options aggregate open interest for April 7. Source: CoinGlass

The 1.85 call-to-put ratio reflects the difference in open interest between the $720 million call (buy) options and the $390 million put (sell) options. However, the outcome will be much lower as bulls were overly-optimistic.

For instance, if Bitcoin's price remains near $28,100 on April 7 at 8:00 a.m. UTC, there will be only $125 million in call options. This distinction arises since the right to buy Bitcoin at $29,000 or $30,000 is rendered void if BTC trades below that on the expiry.

Related: Will Bitcoin break above $30K? New JOLTS data, weaker dollar boost chances

Bulls and bears have similar incentives, so the outcome is unpredictable

Below are the four most likely scenarios based on the current price action. The number of options contracts available on April 7 for call (buy) and put (sell) instruments varies depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

  • Between $26,000 and $27,000: 300 calls vs. 6,000 puts. The net result favors the put (sell) instruments by $150 million.
  • Between $27,000 and $28,000: 1,200 calls vs. 3,500 puts. The net result favors the put instruments by $60 million.
  • Between $28,000 and $29,000: 4,500 calls vs. 1,100 puts. Bulls flip the tables and profit $100 million.
  • Between $29,000 and $30,000: 8,500 calls vs. 100 puts. Bulls' advantage increases to $240 million.

This rough estimate considers only put options in bearish bets and call options in neutral-to-bullish trades. Nonetheless, this oversimplification excludes more complex investment strategies. A trader, for example, could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but this effect is difficult to estimate.

The critical level for the weekly expiration is $28,000, but it is impossible to predict the outcome due to increased economic recession risks and market volatility. If bulls are able to secure a $100 million, those funds will most likely be used to further strengthen the support level.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

BTC dominance steadily rising since 2023, is altseason now a relic?

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BTC dominance steadily rising since 2023, is altseason now a relic?