Flagship cryptocurrency asset, Bitcoin, has reclaimed the $43,000 trading zone, a price point not traded since March 3rd, 2022, despite the interest rate hike by the United States Federal Reserve (Fed).
Last week, the U.S. Fed announced that the interest rate will be raised by a quarter-percentage point to a range of 0.25%-0.5% from its current close to zero level. The central bank raised its benchmark interest rate for the first time since December 2018.
Since the announcement, Bitcoin has gained over $2,000, to currently trade at $43,105 from the $40,951 closing price on the 17th of March 2022. According to On-Chain analytics expert, William Clemente, a major cause for the rally seen is as a result of net accumulation from whale entities in the market.
What you should know
- William tweeted, alongside the illiquid supply shock ratio chart, which shows an uptrend of the ratio, “Illiquid supply shock ratio going essentially vertical. Supply continues to get absorbed by entities with a low statistical history of spending their BTC.”
- He further stated, “It appears recent buyers have been a bit smaller in size, with a spike in buy pressure coming from entities with 1-10 BTC (orange line) over the last 2 weeks.”
- However, according to Damanick Dantes, a crypto market analyst at CoinDesk, he explains that despite bullish indications from on-chain activity, Bitcoin’s trading volume remains low relative to prior highs.
- He further states that although a decisive breakout above $46,000 could encourage additional buying activity, but for now, BTC remains in a month-long trading range and is attempting to reverse a four-month-long downtrend.
- With Bitcoin rallying, we are also seeing bullish action from altcoins. Of the top 10, we are seeing Cardano’s native token, ADA, lead the rally, gaining 18% for the day, as of the time of this writing.
- Other leaders of the top 10 include Solana’s SOL token and Ethereum’s Ether token, which are gaining 6.60% and 3.20% respectively as of the time of this writing.
The open interest for the March 25 options expiry in Bitcoin is $3.34 billion, but the actual figure will be much lower since bulls were overly optimistic. These traders might have been fooled by the short-lived pop to $45,000 on March 2, as their bets for March 25’s options expiry extend beyond $100,000.
Bitcoin’s recent rally above $42,000 took bears by surprise because only 16% of the bearish option bets for March 25 have been placed above this price level. Bitcoin bears need to pressure the price below $42,000 on March 25 to avoid a $175 million loss. On the other hand, the bulls’ best case scenario requires a push above $44,000 to increase their gains to $280 million.
