Research Summary
The report discusses the potential consolidation of Bitcoin within the $40,000 to $45,000 range for the rest of the year, pending any significant news from the SEC regarding the approval of Bitcoin Spot ETFs. It also suggests a strategy of selling a $45,000 strike call for December expiry and buying a $45,000 strike call for January expiry (calendar spread) to maintain upside exposure.
Key Takeaways
Bitcoin’s Potential Consolidation
- Bitcoin’s Expected Range: The report predicts that Bitcoin will likely consolidate within the $40,000 to $45,000 range for the rest of the year, barring any significant news from the SEC about the approval of Bitcoin Spot ETFs.
- SEC’s Role in Bitcoin’s Price: The SEC has yet to make any public comments indicating that an approval for Bitcoin Spot ETFs is likely. The final deadline for rebuttal comments by Bitcoin Spot ETF applicants is January 5, 2024, which could potentially influence Bitcoin’s price action.
Impact of Economic Events
- Upcoming Economic Events: The CPI print on December 12 and the FOMC meeting on December 13 are expected to be pivotal events. However, the report suggests that traders may prematurely head into their Christmas holidays, given the successful year for tech and crypto investors.
- Employment Data’s Influence: The report suggests that non-farm payrolls would need to break below 100,000 to have a meaningful positive effect on the price of Bitcoin.
Trading Strategy
- Calendar Spread Strategy: The report suggests a strategy of selling a $45,000 strike call for the end of December expiry and buying a $45,000 strike call for the January expiry (calendar spread) as a prudent way to maintain upside exposure for any potential SEC Bitcoin Spot ETF approval.
- Financing the January Call: By selling the December call, the price of the January call can be lowered from $2,950 to $1,600, thus reducing the cost of maintaining upside exposure.
Future Outlook
- Anticipated Rally: The report suggests that the market could be set up for another potential rally next year, based on comments from Fed Chair Powell and the assumption that inflation has peaked.
- Managing Risk: The report emphasizes the need for traders to manage their risk in periods of potential consolidation, suggesting that the next few weeks could prove challenging.
Actionable Insights
- Monitor Economic Events: Keep an eye on key economic events such as the CPI print and the FOMC meeting, as they could significantly impact Bitcoin’s price.
- Consider Calendar Spreads: Traders might consider using a calendar spread strategy to maintain upside exposure while limiting downside risk.
- Stay Informed on SEC Decisions: Stay updated on the SEC’s decisions regarding Bitcoin Spot ETFs, as these could significantly influence Bitcoin’s price action.
- Manage Risk: In periods of potential consolidation, it’s crucial for traders to manage their risk effectively.
