rates
Kazakhstan to Increase Tax for Miners, Considers Tying Levy to Crypto Prices
The government of Kazakhstan is preparing to increase the tax burden for cryptocurrency miners and intends to tie the new rate to the value of the minted cryptocurrency. The authorities in Nur-Sultan believe that such an approach would have a positive effect on the state budget. Miners in Kazakhstan to Pay Tax on the Value […]Federal Reserve Hikes Interest Rates
Russia’s Economy Ministry Calls for Introducing ‘Acceptable’ Electricity Rates for Miners
The Ministry of Economic Development of Russia has suggested that crypto mining should be allowed in energy-rich regions and miners provided with access to inexpensive electricity. The department has joined calls to legalize the industry and utilize Russia’s strengths as a mining destination. Crypto Miners Should Have Access to Cheaper Power, Economy Ministry Says Amid […]Electricity Consumption Spikes in Irkutsk as More Russians Start Mining Cryptocurrency
Electricity suppliers in the Russian region of Irkutsk have registered a surge in power consumption in residential areas which they are blaming on cryptocurrency mining. Planes with mining equipment from restricted China continue to land in the region, and cases of hardware theft have also increased significantly. Irkutsk Dealing With Rising Electricity Needs Amid Growing […]Russian Association of Power Suppliers Proposes Measures to Prevent Home Mining
The industry organization of Russian energy suppliers has come up with ideas on how to combat cryptocurrency mining in homes, basements and garages. The association believes the phenomenon is the main issue with mining in Russia as authorities prepare to legalize it. Suppliers Move Against Mining With Cheap Electricity The Russian association of energy suppliers […]Bitcoin bulls may ignore Friday’s $730M options expiry by saving their energy for $40K
Bitcoin price is no longer in reach of $40,000, but data shows bulls are willing to take a few short-term losses in order to strengthen their next run at the key resistance level.
The past few months have been less than pleasant for Bitcoin (BTC) bulls, but they are not alone. Persistent comments from the United States Federal Reserve hint at plans to raise interest rates in 2022 and thi is causing investors to seek protection in inflation-protected bonds.
The monetary authority signaled its intention to substantially raise the benchmark interest rate and they will also gradually reduce the monthly purchase of debt assets.
Even though some crypto investors deem Bitcoin digital scarcity as inflationary protection, that does not change its volatility. In turn, it causes the asset price to move in tandem with risk markets.
The above chart shows Bitcoin price in blue stacked against the smaller U.S. listed companies, as measured by the Russell 2000 equity markets index. Unlike the S&P 500 or Dow Jones Industrial Index, this benchmark excludes those tech giants. Thus, the smaller companies are usually considered riskier and are more impacted when investors fear an economic downturn.
However, the negative performance did not scare investors as the Canada-based Purpose Bitcoin ETF attracted over $38 million worth of Bitcoin this Tuesday, its third-largest daily inflow to date. The fund now holds 31,032 BTC, equivalent to $1.2 billion.
Regardless of investors' sentiment, Bitcoin bulls could face a $120 million loss if BTC price moves below $36,000 on Friday's options expiry.
$730 million in options expire on Feb. 4
According to Friday's options expiry open interest, Bitcoin bulls placed heavy bets between $40,000 and $44,000. These levels might seem optimistic right now, but Bitcoin was trading above $42,000 two weeks ago.
At first sight, the $430 million call (buy) options dominate the $300 million put (sell) instruments, but the 1.43 call-to-put ratio does not really tell the whole story. For example, the 14% price drop over the past two weeks wiped out most bullish bets.
A call option gives the buyer a right to buy BTC at a fixed price at 8:00 am UTC on Feb. 4. However, if the market is trading below that price, there is no value in holding that derivative contract, so its value goes to zero.
Therefore, if Bitcoin remains below $37,000 at 8:00 am UTC on Feb. 4, only $34 million of those call (buy) options will be available at the expiry.
Bears will fight to keep Bitcoin below $37,000
Here are the three most likely scenarios for Friday's options expiry. The imbalance favoring each side represents the theoretical profit. In other words, depending on the expiry price, the active quantity of call (buy) and put (sell) contracts varies:
- Between $35,000 and $37,000: 950 calls vs. 4,210 puts. The net result is $120 million favoring the put (bear) instruments.
- Between $37,000 and $38,000: 1,650 calls vs. 3,300 puts. The net result favors bear instruments by $60 million.
- Between $38,000 and $39,000: 4,230 calls vs. 1,710 puts. The net result is balanced between call and put options.
This crude estimate considers call options used in bullish bets and put options exclusively in neutral-to-bearish trades. However, this oversimplification disregards more complex investment strategies.
Bulls need $38,000 to balance the scales
A mere 3% price pump from the current $36,900 level is enough for Bitcoin bulls to avoid a $120 million loss on the Feb. 4 options expiry. Still, the same rationale applies to Bitcoin bears because pinning BTC below $37,000 can easily cause them to secure a $120 million profit.
Considering the short-term negative sentiment caused by tighter macroeconomic conditions, Bitcoin bulls should pace their energy for a sustainable recovery to $40,000 and higher instead of wasting efforts right now. Therefore, options markets data slightly favor the put (sell) options.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Utility Seeks $800,000 From Russians Mining Crypto With Cheap Power
The main utility company in Irkutsk is looking to collect almost $800,000 from owners of crypto farms that have allegedly caused a spike in electricity consumption in the Russian region. The supplier accuses the miners of burning cheap household electricity in what is, in fact, a business activity. Power Utility Takes Crypto Miners to Court […]Power Outages in Russia’s Irkutsk Region Blamed on Home Miners
Russians mining cryptocurrency in their homes have been blamed for the problems with the electricity supply in Irkutsk. Power outages have become a frequent occurrence in the region which maintains the lowest electricity rates in Russia. Subsidized household energy has turned mining into a source of income for many locals. Electricity Consumption Spikes Amid Spread […]Iran Allows Renewable Power Plants to Supply Crypto Miners With Electricity
Authorities in Iran have decided to permit power generation plants using renewable sources to sell electricity to licensed cryptocurrency miners. The move comes after the government asked mining companies to suspend activities in order to avoid winter blackouts. Crypto Miners in Iran to Mint Digital Coins Using Renewable Energy Regulated companies mining cryptocurrency in Iran […]