Research Summary
The report discusses the recent correction in Bitcoin’s price and the potential for further consolidation within the $40,000 to $45,000 range. It highlights the influence of institutional players, the impact of macroeconomic events, and the role of technical indicators in Bitcoin’s price movements. The report also suggests a trading strategy involving Bitcoin call options and anticipates a potential rise in Bitcoin’s price starting January 1, 2024.
Key Takeaways
Bitcoin’s Price Consolidation
- Anticipated Price Range: The report predicts that Bitcoin will likely consolidate within the $40,000 to $45,000 range for the rest of the year. This prediction is based on market structure analysis, which indicates that leveraged long positions are stretched.
- Impact of Macroeconomic Events: The report suggests that panic buying ahead of critical macroeconomic events, such as the CPI data release and the FOMC meeting, combined with the upcoming Christmas holidays, could cause traders to close positions, leading to a decline in Bitcoin’s price.
Role of Institutional Players
- Influence on Bitcoin’s Price: The report notes that with more institutional players involved in Bitcoin trading, the likelihood of a price decline around Christmas increases. This is based on the observation that Bitcoin tends to decline into Christmas.
- Positioning on CME Bitcoin Futures: The report points out that the bullish positioning on the CME Bitcoin futures is unlikely to be carried over the Christmas holidays, as the futures are trading at a significant premium to the spot market.
Trading Strategy Involving Bitcoin Call Options
- Suggested Trade: The report suggests a trade strategy of selling the December Bitcoin calls with a strike level of $45,000 and buying the same one for the January expiry. This strategy aims to hedge out the December period and lower the call premium.
- Price Movements of Bitcoin Call Options: The report notes that the price for the December 29 expiry, $45,000 strike Bitcoin call option has declined from $1,350 to just $750, while the January one has declined from $2,950 to $2,100.
Anticipated Price Rise in January
- Expected Price Movement: The report anticipates that favorable macro outcomes will strongly incentivize Bitcoin to start rising out of the gate on January 1, 2024.
- Yearly Performance: The report highlights that Bitcoin has rallied by +165% this year, which will likely facilitate many cheerful conversations around the Christmas tree.
Actionable Insights
- Consider the Impact of Macroeconomic Events: Traders should be aware of the potential impact of upcoming macroeconomic events on Bitcoin’s price and adjust their trading strategies accordingly.
- Monitor Institutional Activity: Keeping an eye on the activity of institutional players in the Bitcoin market can provide valuable insights into potential price movements.
- Evaluate Trading Strategies: Traders might want to consider the suggested trading strategy involving Bitcoin call options, taking into account their own risk tolerance and investment objectives.
- Prepare for Potential Price Rise in January: Traders should be prepared for a potential rise in Bitcoin’s price starting January 1, 2024, based on the report’s analysis.
