Bitcoin offers market a $ 2,000 pump just before New Years
Bitcoin has decided to make a great gift for the majority of the cryptocurrency market with a 3% flash pump that appeared on the market a few hours ago before press time.
The reason behind the pump
Some traders assumed that the sudden purchasing power in the market arose due to the technical recovery that was long awaited by a severely oversold market.
But the real cause lies in the December options expiry with a max pain price below $47,000. After the expiry, the next options contracts become the market’s main tool for hedging positions, or “betting” on the next Bitcoin price in the specified period.
Since Bitcoin tends to follow derivatives rather than trends in the spot market, options and futures are two primary determinants of the price formation process. The expiration of options, however, does not directly affect the price; instead, the maximum pain price of options can serve as a guideline for spot traders.
Bitcoin’s New Year’s Eve performance
At press time, Bitcoin is entering the year 2022 with a “green day” and an almost 3% price increase. But unfortunately for crypto investors, the largest cryptocurrency on the market has lost 30% of its value since the all-time high.
During the year, Bitcoin experienced several bearish and bullish cycles that resulted in both strong rallies and corrections. For now, Bitcoin is trading at the September, April, and February levels.
