30s Summary

Despite Bitcoin’s price drop to $67,000 on October 21, demand for Bitcoin derivatives remained solid and stable, showing no sign of panic among traders. The price of Bitcoin futures stayed above 9% indicating positivity in the market. The strong performance can be attributed to investors expecting higher returns amid rising inflation and concerns about government spending. Observations indicate that Bitcoin’s price is linked to movements in the stock market with both affected by wider economic fears. Data highlights that “put” options are cheaper than “call” options, suggesting resilience in Bitcoin derivatives despite the decline in Bitcoin’s price.

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On October 21, the price of Bitcoin dropped to $67,000, wiping out the increases from the previous three days. Some experts think this happened because investors were scared of traditional markets affecting their Bitcoin investments. But despite this, Bitcoin derivatives stayed strong and stable.

Even with worries that economies might be slowing down or governments struggling to pay off debts, demand for Bitcoin derivatives stayed solid. If major players or traders expected a further drop, the figures would have been more volatile.

When it comes to Bitcoin futures, there was hardly any reaction on October 21. The price of Bitcoin futures usually stands between 5% and 10% above the expected price and stayed above 9%, despite Bitcoin’s price drop, giving us a clue about market sentiment.

Arif Husain of T. Rowe Price, stated that investors are expecting higher returns because of rising inflation and concerns about government spending. He believes the U.S. government will saturate the market with new debt while the Federal Reserve is trying to counteract the inflation to prevent the economy from overheating. The U.S. debt interest costs are more than $1 trillion, making the central bank think about lowering interest rates.

When it comes to Bitcoin’s relationship with the stock market, it can be affected by fear, uncertainty, and doubt in the wider economy. Although Bitcoin is often not linked to traditional markets, the 40-day pattern has it closely linked to the S&P 500, which means both have been affected by the same things.

Bitcoin options markets show the same pattern of resilience. The data shows that “put” options (expecting the price to go down) are cheaper than “call” options (expecting the price to rise). Traders did not go into a frenzy when Bitcoin’s price dropped. If they were freaked out, the skew would have shifted toward zero or higher. So, Bitcoin derivatives remain strong, even with the recent price drop. Please note this information is just for a general understanding and not for investment advice.

Source: Cointelegraph