Bitcoin (BTC) demonstrated resilience above the $40,000 mark during Thursday’s European trading hours, with a flat performance in the dollar index ahead of the eagerly awaited U.S. fourth-quarter gross domestic product (GDP) report. At 09:38 UTC, Bitcoin, the leading cryptocurrency, traded at $40,100, recovering from a recent dip that tested demand around $38,500 earlier in the week.
Traders are adjusting expectations regarding potential Federal Reserve rate cuts in light of the persistent inflationary challenges. Fed funds futures indicate a reduced probability of a rate cut in March, with traders now seeing a 50% chance, down from 80% a month ago. Market participants are closely monitoring the U.S. GDP data scheduled for release at 13:30 UTC, expecting the final quarter of 2023 to show a 2% seasonally adjusted annualized pace, marking a decline from the 4.9% in Q3.
The focus is also on the significant options expiry set for Friday at 08:00 UTC, where bitcoin options worth $3.75 billion and ether options worth $2.07 billion will expire on Deribit, the world’s largest crypto options exchange, representing over 85% of global activity. Deribit’s Chief Commercial Officer, Luuk Strijers, noted a market recovery from initial shocks related to ETF introduction and GBTC unwind. Call-put skew has been increasing, indicating a shift in market sentiment, and traders have been rolling positions forward from January expiry contracts to February expiry contracts.
Bitcoin’s January expiry options indicate a max pain point at $41,000, while ether’s is at $2,300. The max pain point represents the level where options buyers could incur the most significant losses on expiry. In traditional markets, it is theorized that options sellers aim to move the underlying spot market closer to the max pain point before expiry to maximize losses for buyers.