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After an incredible start in 2021, Ether peaked at $ 4,380 on May 12 but has fallen 55% since then. Unlike the main cryptocurrency, the Ethereum network faces competition from projects that do not depend on proof of work, and therefore does not face the bottleneck issues that have skyrocketed fees. transaction.
Whenever the markets disappoint traders with negative surprise, traders quickly seek external explanations for their inability to interpret signals. But, in reality, a clear indication that China was concerned about the energy consumption of crypto mining came out on April 30, six weeks before the initial price drop.
On May 6, the recently confirmed chairman of the United States Securities and Exchange Commission, Gary Gensler, visited Congress to strengthen regulatory oversight of the crypto space. However, in defense of overly optimistic investors, similar promises have been circulating for more than four years.
Regardless of the many reasons behind recent negative market performance, traders like to blame someone for their mistakes, and what better scapegoat than derivatives markets?
Cointelegraph was the first outlet to analyze the expiration of $ 2.5 billion Bitcoin futures contracts, potentially giving the bears a $ 450 million lead if the price did not hit $ 32,000 on June 25. . -or-break, because 73% of neutral to bullish options would be worth nothing below $ 2,200.
The updated open interest figures show open interest of $ 1.36 billion in Ether options and an additional $ 500 million in futures contracts that expire on Friday. Meanwhile, open interest on Bitcoin options has risen to $ 2.64 billion, while another $ 1.44 billion is expected to expire in the futures markets.
To understand whether derivative markets, primarily quarterly maturities, have such a large impact on prices, investors need to assess past maturities.
December 2020 and March 2021 reflect divergent movements
In November 2020, Bitcoin initiated a strong rally, racking up gains of 75% before the December expiration.
The price of Bitcoin expires in December 2020 and March 2021. Source: TradingView
Over 102,000 Bitcoin options expired on Christmas Day, but there was no apparent impact. Instead, the uptrend continued as Bitcoin then rose an additional 69% in 12 days.
March 2021, on the other hand, showed completely different price action. The price of Bitcoin plunged 14% before options expired, although it recovered fully over the next four days.
It should be noted that on March 22, US Federal Reserve Chairman Jerome Powell said, “Bitcoin is too volatile to be money” and “is not backed by anything.”
In the same week, billionaire fund manager Ray Dalio raised concerns about a possible “Bitcoin ban in the United States.”
March, June and September 2020 showed no signs of emptying before expiration
If March 2021 could have constituted a case of dumping before the expiry, the previous year saw a reverse movement.
The price of Bitcoin at the expires of March, June and September 2020. Source: TradingView
Bitcoin saw a 31% rise in the ten days leading up to the March 26, 2020 expiration. However, an 11% correction occurred the next day, potentially allowing investors to cite “manipulation”. However, the drop in the hash rate of 45% that surrounded the date is part of the reason for the massive sell-off.
The June 26 expiration did not appear to have a significant impact on the price as Bitcoin fell 2% before the event and a further 2% over the next two days. However, an exact reverse trend occurred at the September 2020 expiration when Bitcoin rose 2% before September 25 and continued to rise 2% over the next two days.
The expiration of options and futures cannot be considered bearish or bullish
As the data from the previous five quarterly timelines show, there is absolutely no indication of a pump-and-dump (or reverse) movement before the derivative events.
For investors and traders waiting for confirmation from the bottom, the answer likely lies in recomposing Bitcoin’s hash rate.
It should also be taken into account that Chinese OTC traders re-established their fiat gateways after the recent nationwide ban on cryptocurrency transactions.
The price of Bitcoin has recovered slightly from its sharp drop below $ 29,000, but in general the past month has not been generous to BTC and Ether (ETH). Bitcoin has failed to break through the $ 40,000 resistance on several occasions, and the recent drop to a six-month low at $ 28,800 was a surprising sign to many investors.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade move involves risk. You should do your own research before making a decision.
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