Bitcoin’s price struggles to stay above $90,000, and experts are seeing patterns in the options market that resemble the recent slide in Trump media shares. The implied probability distribution, which reflects market expectations for the future price of an asset based on options prices, has shifted to the left. This shift suggests that traders believe there is a higher probability of Bitcoin trading at lower prices in the near future.
Griffin Ardern, head of options trading and research at crypto financial platform BloFin, noted that this left shift in the implied probability distribution was also seen in the DJT options market before the recent price slide. Trump media shares went from $54 to $27 in just over two weeks, indicating a significant drop. This drop came after markets initially priced in a potential victory for Republican candidate Donald Trump in the U.S. election.
Despite Bitcoin’s recent surge to over $90,000, hawkish comments from Fed officials suggest that a price pullback may be on the horizon. Fed Chairman Jerome Powell’s remarks about the economy not signaling an urgent need for rate cuts could impact risk assets like Bitcoin. The Fed has already cut rates by 75 basis points since September, providing bullish signals for the market.
While some traders are betting on Bitcoin surpassing the $100,000 mark, the overall sentiment remains bullish. Market participants are optimistic about the potential for Bitcoin to rise further, but the implied probability distribution indicates that caution may be warranted.
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In conclusion, the options market signals a potential price pullback for Bitcoin, similar to the recent slide in Trump media shares. While the cryptocurrency has seen significant gains recently, caution is advised as market dynamics and external factors could influence future price movements. Investors and traders should closely monitor market trends and developments to make informed decisions about their cryptocurrency holdings.