The price of Bitcoin stagnated after an unsuccessful attempt to surpass the $27,400 resistance on June 6, suggesting that investors had become less assured in the wake of the recent regulatory steps taken by the United States Securities and Exchange Commission (SEC) against Binance and Coinbase. Both exchanges are being sued for a variety of reasons, such as not registering as licensed brokers and providing unregistered securities.
The SEC might have a difficult case ahead
The CEO of the Blockchain Association, Kristin Smith, has stated that the SEC is attempting to avoid the standard rulemaking process and avoid public involvement. Conversely, Will Paige, an analyst at Insider Intelligence, believes that the SEC’s purpose is to police the cryptocurrency sector without having a legal framework in place.
Investors may be holding onto their expectations for the U.S. Financial Services Committee hearing set for June 13 due to the critiques expressed.
Sen. Bill Hagerty has expressed concern that the SEC may be overreaching, and has publicly criticized SEC Chairman Gary Gensler, stating that regulators there are “weaponizing their role”. This has caused reverberations in the U.S. legislature.
The rise in decentralized finance volumes further demonstrates that the cryptocurrency sector can operate without crypto-banks, also referred to as centralized exchanges.
The trading volume on the top three decentralized exchanges (DEXs) saw a 444% increase between June 5th and 7th. As DEX volumes rose, Binance experienced net outflows of $778 million, the difference between the value of assets entering and leaving the exchange.
Bitcoin (BTC) has been attempting to regain the $27,000 support level, but that could prove to be more difficult than anticipated due to the upcoming $670 million weekly options expiry on June 9.
Bulls have been caught by surprise with the negative newsflow
It is noteworthy that the open interest for the June 9 expiry will be lower due to bulls concentrating their bets above $27,000. These traders became overly optimistic after Bitcoin’s price rose 9% between May 25 and May 29, pushing up to the $28,000 resistance.
The put-to-call ratio of 0.63 demonstrates the discrepancy between the $410 million worth of call (buy) open interest and the $260 million in put (sell) options. However, if Bitcoin’s price stays close to $26,500 at 8:00 am UTC on June 9, only $38 million of these call (buy) options will be accessible. This discrepancy occurs because the ability to purchase Bitcoin at $27,000 or $28,000 is pointless if BTC is trading beneath those levels at expiry.
The US District Court has issued a summons to Binance CEO Changpeng Zhao in relation to a lawsuit brought by the US Securities and Exchange Commission.
Bitcoin bears aim for sub-$26,000 to increase their payout
These are the four most probable scenarios based on the current price action. The amount of call (bull) and put (bear) options contracts that are available on June 9 will be contingent on the expiration price.
The advantage that each side has over the other provides the potential for profit.
This rough calculation takes into account the put options used in bearish investments and the call options used in neutral to bullish trades. However, this simplification ignores more intricate investment techniques.
Given the liquidation of Bitcoin longs using futures contracts to the tune of $100 million on June 5, bulls may have less margin needed to attempt to increase the BTC price above $27,000. Therefore, bears appear to be in a better position to make a good profit on Friday’s options expiry.
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