As Bitcoin, denoted as BTC, hovers at a trading price of $43,244, the cryptocurrency market is on the edge of its seat, awaiting a critical event scheduled for December 29 at 8:00 am ET: a monumental $10.1 billion options expiry. The outcome of this event could have profound implications for the world’s leading cryptocurrency.
Recent data paints a picture of clear dominance by call (buy) options in this high-stakes showdown. Nevertheless, bears still maintain a glimmer of hope, hoping to exert their influence by pushing Bitcoin’s value below the crucial $42,000 mark.
With the deadline for this options expiry rapidly approaching, both bullish and bearish players have compelling motivations to impact Bitcoin’s spot price. The final result hinges on the expiry price. In this intense face-off, the options market leader, Deribit, boasts an astonishing $7.7 billion in open interest. However, what’s particularly surprising is the runner-up, the Chicago Mercantile Exchange (CME), which commands $1.38 billion in open interest, surpassing third-placed OKX with $630 million.
One of the primary drivers fueling bullish sentiment among call option holders is the anticipation of a spot Bitcoin exchange-traded fund (ETF) receiving approval in January. The U.S. Securities and Exchange Commission (SEC) has notably shifted its stance toward ETF proponents, opting for constructive dialogue rather than outright rejections. This shift has raised hopes for a potential ETF approval in January, making it less likely for bears to suppress Bitcoin’s value below $40,000 before the year-end options expiry.
The aggregate open interest for the December options expiry currently stands at a staggering $10.1 billion. However, it is expected to decrease, as the recent rally above $40,000 caught bearish investors off guard, evident in the Deribit Bitcoin options interest chart.
The combined open interest of Deribit and CME options amounts to approximately $9 billion, with put (sell) options underrepresented by 32%. This imbalance contrasts with the $5.4 billion in call (buy) open interest. Given Bitcoin’s remarkable 25% surge since November, the majority of put (sell) options are likely to expire worthless.
Should Bitcoin remain near $43,100 at 8:00 am UTC on December 29, only $185 million worth of these put (sell) options will retain value. This disparity arises because the right to sell Bitcoin at $40,000 or $43,000 becomes worthless if BTC is trading above those levels at the time of expiry.
To level the playing field before the monthly expiry, Bitcoin bears must aim for a modest 3% price decrease down to $41,900. Conversely, the bulls need to push the price above $44,000 to secure a $1.15 billion advantage on December 29. However, this potential windfall for call option holders could serve as a catalyst for further price gains ahead of the ETF decision in January.
As the cryptocurrency market braces for this pivotal moment, all eyes are on the options expiry on December 29. The outcome will not only impact Bitcoin’s short-term price movement but could also set the stage for a potentially game-changing ETF approval in the coming month. Traders and investors alike will be closely monitoring every move in this high-stakes battle for dominance in the Bitcoin options market.
Bitcoin Hash Rate Achieves Record High on Christmas, Yet Miners Face Profitability Challenges
On Christmas Day, the Bitcoin network achieved a remarkable milestone that sent ripples of excitement throughout the cryptocurrency community. The network attained an all-time high mining hash rate, reaching an astonishing 544 exahashes per second. This surge mirrors the impressive increase in hash rates seen throughout the year, echoing the substantial price trajectory of the digital asset, which has surged by 163% since the year’s commencement.
Max Keiser, a prominent Bitcoin advocate and advisor to the president of El Salvador, recently took to social media to share his insights on the implications of this milestone. Keiser proposed an implied hash-adjusted price for BTC exceeding an incredible $400,000. While this bold prediction has sparked widespread speculation about potential price models, the practical consequences of this hash rate surge are placing increasing pressure on Bitcoin miners, who are grappling with a notable dip in profitability.
The concurrent surge in both hash rates and Bitcoin’s price presents a paradox for the mining community. On one hand, an elevated hash rate signifies that miners must intensify their efforts to secure the next block, resulting in higher operational costs and a challenging operational landscape. Miners are now investing in more advanced and energy-efficient hardware to stay competitive.
However, the enthusiasm surrounding the record-breaking hash rate is dampened by the hash price, a critical metric that measures mining profitability. Over the past week, the hash price has experienced a significant decline, currently standing at $0.09 per terahashes per second per day. This decline is attributed to fading interest in the BRC-20 ordinal inscription trend, which had previously driven up transaction fees and mining profitability.
This profitability decline is further underscored by a notable decrease from the 2023 peak, which occurred on December 17. This shift in hash price dynamics reflects the waning enthusiasm surrounding inscription hype. In the heyday of inscription trends, they led to increased demand for Bitcoin transactions and subsequently drove up transaction fees, providing a significant source of income for miners.
Miners are now facing a challenging dilemma. On one hand, they benefit from the security and decentralization of the Bitcoin network due to the record hash rate. On the other hand, declining profitability creates economic pressures that may compel some miners to reassess their operations or explore alternative cryptocurrencies to mine.
As Bitcoin continues to captivate the attention of investors, institutions, and enthusiasts worldwide, the delicate balance between hash rate and profitability remains a subject of intense scrutiny. While the recent milestone attests to the network’s strength and security, it also underscores the ongoing challenges faced by those tasked with upholding the blockchain’s integrity. As we venture further into the new year, all eyes will remain fixed on the Bitcoin mining landscape, observing how miners adapt to the ever-evolving dynamics of the cryptocurrency market.
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