Crypto Market recovery after FOMC meeting

Stocks, bitcoin, and altcoins rebounded after the Fed released its policy roadmap for the following year. However, bears still maintain an advantage of $756 million options expiry this week.

Bitcoin’s price started to go down after the $69,000 all-time high last month when the Labor report showed inflation moving above 6.3% in the United States. The VanEck physical Bitcoin exchange-traded fund (ETF) surprised some investors, while this news might benefit non-inflationary assets.

While analysts expected the ETF request denial, the reasons might be problematic for some investors. The U.S. SEC mentioned the inability to bypass market manipulation on the broader Bitcoin market because of heavy trading volume and unregulated exchanges.

Examining the broader market structure is highly appropriate, especially since investors carefully observe the U.S. Federal Reserve meetings. Regardless of the importance of the approaching tapering in the assets repurchase program and Fed’s bond, Bitcoin’s moves have tracked the U.S. Treasury yields over the past year.

It shows how firm the Fed’s monetary policy has been with Bitcoin and other riskier assets. Moreover, the yield decrease from 1.65 to 1.44 partly describes the weakness noticed in the crypto market.

Overview of the market

Obviously, there are other different factors in play. For example, last month’s market pullback was primarily related to concerns over the new omicron variant. A Bitcoin price below $49,000 gives bears total control over $756 million BTC options expiry concerning derivatives markets.

At first view, the $475 million call options surpass the $286 million put instruments, but the 1.65 call-to-put ratio is misleading as the 15% price dropped since the end of November.

If Bitcoin’s price stays below $48,000, only $29 million worth of those call options will be open at the expiry. In short, there is absolutely no value to buy Bitcoin now if it will trade below $48,000.