The Rollercoaster Ride of Bitcoin

On December 14, Bitcoin (BTC) jolted past the $18,000 mark, finally giving folks something to cheer about after a 34-day slump. This 16.5% surge from the $15,500 low seen back in November had traders rallying like they were at a Rocky movie marathon. Meanwhile, the S&P 500 futures ticked up by 3%, reclaiming the all-important 4,000-point support, making it a twin victory of sorts for those holding stocks and crypto.

What’s the Fed Got to Do with It?

Despite the bullish atmosphere, investors were waiting with bated breath for the U.S. Federal Reserve’s decision on interest rates. As it turns out, the Fed did what it does best: offer a 50 basis point hike. Coupled with Fed chair Jerome Powell’s analysis, this caused considerable concern among Bitcoin holders. Many feared that the upward momentum might not stick around long enough to survive the impending $370 million options expiry on December 16. And who can blame them? With the Fed’s balance sheet swelling from $4.16 trillion to a jaw-dropping $8.9 trillion in two years, skepticism lingered like a bad smell at a crowded elevator.

Bearish Bets Placing Their Chips

Bears were clearly feeling a little frisky, having placed a majority of their bets below the $16,500 mark. The open interest for the December 16 options expiry hit $370 million, though that figure would likely shrink as traders recalibrate their expectations. With the surprising rise to $18,000, many of these bears found themselves in the wrong circus.

The current call-to-put ratio of 0.94 implies a near stalemate between the seesawing interests, but as Bitcoin pivoted toward $18,000, chances are many of those bearish bets are headed for the grand old junkyard of bad ideas.

Scenarios Ahead: What Could Happen?

Looking forward, let’s glide into the future of Bitcoin with a few possible scenarios:

• Between $16,500 and $17,500: It’s a dance-off! 1,400 calls versus 1,200 puts, giving a balanced outcome.
• Between $17,500 and $18,000: Bulls come charging with 3,700 calls and only 100 puts. That’s a $60 million nod toward the bulls.
• Between $18,000 and $19,000: A whopping 6,200 calls and no puts? Sounds like a bullish block party with a $115 million profit advantage.
• Between $19,000 and $19,500: Here we go again! The number of calls swells to 8,100, propelling the bulls toward a potential $155 million feast.

The Ripple Effects of FTX’s Fiasco

Against this lively backdrop, news regarding the FTX exchange has continued to tank Bitcoin’s reputation. Allegations floated around claiming Alameda Research had a sneaky advantage in the trading world, enabling faster executions and an auto-liquidation exemption. No wonder traders are a little jittery!

As we approach December 16, bulls need a grand slam above $19,000 to unwrap that $155 million gift. But the lingering regulatory shadows and the contagion effects may make that UFC-level struggle feel more like an arm wrestling match.