The Triangles of Hope and Skepticism

Over the last couple of months, Bitcoin has been playing a game of hopscotch within an ascending triangle formation. This might sound like a fun little dance, but let’s not get too carried away—its price is still down 11% year-to-date. To put that into perspective, the Bloomberg Commodity Index (BCOM) danced a full tango with a 29% gain. Who knew commodities had such good moves?

Commodities Taking the Lead

The boost in the commodity index is largely thanks to booming prices in sectors like crude oil, natural gas, and even corn and wheat. Meanwhile, Bitcoin has been struggling like a contestant on a reality show trying to impress its judges. Its total cryptocurrency market cap is hovering just below the elusive $2 trillion mark at $1.98 trillion, unable to break the red tape.

Economic Ducks in a Row

So why the struggle? Well, if we peek behind the curtain, we see 40-year record high inflation in the U.S., coupled with a hefty $1.5 trillion spending bill approved to keep the government funded through September. These economic woes have put a huge squeeze on the supply curve, sending commodity prices soaring. It’s like a game of Jenga, where one wrong move can topple the whole thing.

Fed’s Rate Hikes: The Party Crasher

Concerns are mounting that the U.S. Federal Reserve will crank up interest rates throughout 2022 to rein in this pesky inflation. If the global economy were to slip into a recession, savvy investors might flee to the safety of U.S. Treasuries and the dollar. Spoiler alert: cryptocurrencies likely wouldn’t win any popularity contests in this scenario.

Bitcoin Bulls and Bears: The Showdown

The open interest for the March 25 options expiry in Bitcoin stands at a staggering $3.34 billion, but let’s be real—many of those bets are likely based on a wild fantasy ride. With bulls aiming for prices over $100,000, they seem to be chasing after a rainbow that doesn’t exist. Even the recent bounce above $42,000 caught bears off-guard; only 16% of the bearish bets were placed above this price level. Talk about a plot twist!

The Options Odds

With a 1.75 call-to-put ratio, there’s more money riding on bullish bets ($2.13 billion) compared to bearish ones ($1.21 billion). If Bitcoin can hold above $42,000 by the expiry on March 25, a mere $192 million worth of put options would be left standing. Not exactly a cushy spot for the bears!

Profit Scenarios: The Crystal Ball

Let’s break down the upcoming March 25 options into juicy scenarios:

• Between $39,000 and $42,000: A balanced net result with 6,300 calls vs. 6,300 puts.
• Between $42,000 and $44,000: Bulls take the lead with 8,700 calls vs. 4,600 puts, profiting by $175 million.
• Between $44,000 and $45,000: Bulls ramp up their profits to a whopping $280 million with 10,600 calls vs. 4,300 puts.

Of course, this doesn’t capture all the intricate strategies out there. But hey, it’s better than just flipping a coin!

Conclusion: The Final Countdown

In the grand drama of Bitcoin, bulls will fight tooth and nail to keep it above the $42,000 mark, as falling below would unleash a $175 million loss for the bears. With over $150 million in leveraged short positions liquidated on March 22, bears may find themselves running low on weapons. As we head toward the options expiry, the battle lines are drawn—who will win this high-stakes poker game? Buckle up, because this rollercoaster isn’t slowing down any time soon!