Bitcoin’s recent rally towards $30,300 has caught traders off guard and triggered $125 million in liquidations of leveraged short futures contracts. The trigger for the rally is complicated, but some analysts point to a potential inflow of institutional investors if Blackrock’s exchange-traded fund (ETF) application gets regulatory approval. ARK Invest CEO and chief investment officer Cathie Wood explained the rationale for the firm’s bullishness on Bitcoin price, specifically their $1 million target. Additionally, negative regulatory pressure eased after Binance exchange struck a temporary agreement with the U.S. Securities and Exchange Commission (SEC) to avoid a potential asset freeze.
The article explains how bears concentrated their bets on Bitcoin prices trading below $27,000 due to Bitcoin’s price dropping below $26,300 on June 10. However, the outcome will be lower since bears were caught by surprise as Bitcoin gained 10% in two days. Bulls are now in a good position to capture a $250 million profit. The critical level for the weekly expiration is $28,000, but it is impossible to predict the outcome due to increased cryptocurrency regulatory risks. If bulls can profit $250 million or higher, those funds will most likely be used to further strengthen the $28,000 support.
The article concludes that the estimates consider only put options in bearish bets and call options in neutral-to-bullish trades. This oversimplification excludes more complex investment strategies. A trader could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but this effect is difficult to estimate. Bears will likely try to downplay multiple Bitcoin ETF applications, including Blackrock’s and WisdomTree’s, while bulls should closely monitor ongoing regulatory changes.