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A bullish case for Bitcoin for SP:SPX by biomeadows

Based on the BTC options open interest by strike price chart (see https://www.coinglass.com/options), with a expiry date of 220128, there is high percentage of bets on the BTC price reaching 70k by the end of January 2022. Overall, there is a Call/put open interest ratio of 2.17 for the expiry date of 220128 and call/put volume ratio of 1.95. This shows the positive sentiment of the smart money on the future price direction of Bitcoin . The Fed started its tapering program in March 2020 after the COVID-19 pandemic resulted in a national lockdown. By November 2021, the Fed had bought over US$4 trillion worth of treasurys and other securities. They began tapering in November 2021, scaling back total purchases by $15 billion a month, from $120 billion to $105 billion by the end of November. The Fed doubled the tapering rate on Dec. 15 and is going to do so until the will no longer purchase new assets sometime in March. After that they will increase its federal funds rate to 0.9 by the end of 2022. This process starts soon after the end of the tapering somewhere in March, 2022. The feds have revised higher inflation rates for the upcoming years (see https://www.cnbc.com/2021/12/15/the-majo…). The last time the feds tapered asset purchases was in the January of 2014 which ended on November of that year. A look at the S&P 500 index shows that the tapering did not crash the stock market. I do not expect the fed stop of asset purchases to crash the markets at this time. The historical chart of the federal funds rate (see https://www.macrotrends.net/2015/fed-fun…) shows that the interest rates raised from 0.09 at the start of the year 2015 to gradually reach a peak of 2.4 in 2019. It was subsequently reduced to 0.08 in 2020 to stimulate the economy as a result of Covid pandemic. Again, a look at the S&P 500 index shows no serious drop in the markets as a result of the interest rate hike. Based on the options open interest and historical data regarding the effect of Fed tapering program, and interest rate rise on the S&P 500 performance, I don`t expect any sort of bear market happening in 2022. Furthermore based on Bitcoin historical performance data, the last time that it had two consecutive negative monthly returns in November and December was in 2019 (see https://www.coinglass.com/today). This was followed by a 30 percent rally in the January of 2020. Given that the Feds are still continuing asset purchases in January and February of 2020 and interest rates are the lowest, I expect the 2019-2020 cycle to repeat again, with Bitcion price rally in January to new ATH before correcting. Still, be mindful of a possible sudden downward movements prior to the rally to a new ATH sometime in the beginning of January 2022. These types of movement also known as Judas Swing are designed by market makers to liquididate high leverage longs prior to a uptrend rally. The Bitcoin price may drop lower to around 43k if such a scenario happens. Do not assume that we are entering a bear market if we have a sudden downward movement to the 43k range.
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