FX168 Financial News (North America) News On Thursday (January 25), during the European trading session, Bitcoin (BTC) was once expected to stand above US$40,000, but now it has fallen back below US$40,000. The dollar index rose following the release of much-anticipated U.S. fourth-quarter gross domestic product (GDP) data.
Bitcoin tested a demand bottom near $38,500 earlier this week. The U.S. dollar index, which measures the dollar's value against major fiat currencies, is consolidating around 103.70, down from highs around 103.82 hit on Monday.
Traders have been reconsidering the prospect of an early interest rate cut by the Federal Reserve amid the ongoing inflation crisis. Traders now price a 50% chance of a rate cut by the Fed in March, down from 80% a month ago, according to federal funds futures.
U.S. gross domestic product (GDP) grew by 3.3% in the fourth quarter, exceeding economists' estimates of 2% growth, but slowing down from the 4.9% growth in the third quarter of last year. The increase suggests the U.S. economy is broadly in line with December's 3.4% inflation rate.
Inflation is the rate at which the prices of goods and services rise, and all other things being equal, a high inflation rate can make consumers feel like their money can't buy them what they used to.
The report noted that fourth-quarter growth was driven by strong consumer spending and government spending. According to data from CoinGecko, Bitcoin trading volume approached $30 billion yesterday.
The U.S. GDP report comes amid the potential expiry of billions of dollars in cryptocurrency futures, derivatives used by investors to predict future price movements in commodities, currencies or cryptoassets.
Luuk Strijers, chief commercial officer at Derebit, said in an email: “Tomorrow’s expiration is particularly notable, with approximately $3.7 billion in notional Bitcoin options exposure set to expire, with the maximum pain level at $41,000, and Ethereum’s The biggest pain point is $2,300.”
The biggest pain point is the level at which option buyers lose the most at expiration. The theory in traditional markets is that option sellers (usually well-funded institutions) try to cause the most damage to the buyer by pushing the underlying spot market to the greatest pain point before expiration.
He also added that there are signs that many traders are not planning to let their contracts expire immediately, "This period has seen the highest activity in options expiring in January and February, which suggests that many traders are rolling their contracts over." position."
This all comes amid a particularly busy January for the cryptocurrency market, in which the SEC approved 11 different spot Bitcoin exchange-traded funds (ETFs) and billions of dollars in ETF shares were traded. Grayscale Bitcoin Trust saw quite large redemptions after investors sold. All this selling caused Bitcoin to come under intense pressure, falling to $38,678 at the start of the week.
Luuk Strijers said: “With tomorrow’s option expiry approaching, the market is clearly recovering steadily from the initial shock of the ETF launch and GBTC unwinding. It is worth noting that the call option skew has started from the earlier lows. An increase indicates a shift in market sentiment."