Is the Bitcoin Decline Over? Year-End Opportunities

Bitcoin is attempting to stabilize following a sharp decline of 30% in recent days. QCP’s new report reveals that the factors determining market direction are strong Call positions along with increasing expectations of interest rate cuts. In particular, the soft comments made by Federal Reserve (Fed) officials John Williams and Mariana Miran on Friday changed the overall sentiment in the markets, raising the likelihood of a rate cut in December to 75%. Just last week, this rate hovered between 30% and 40%, while liquidity-sensitive assets like Bitcoin began to price in this macro change rapidly.

However, QCP analysts point out that Bitcoin still carries the traces of the sharp selling seen in recent weeks, and the technical outlook has not completely turned positive. According to the data in QCP’s report, an interesting divergence is observed in the derivatives markets. The billions of dollars in open positions concentrated in year-end Bitcoin Call contracts show that investors are hedging against downside risks while also keeping a strong recovery possibility on the table. Looking at the distribution of open positions, there is a notable accumulation of Calls at the levels of $85,000, $120,000, $130,000, $140,000, and $200,000.

QCP indicated that this situation points to an increase in volatility as we move towards the end of the year. Additionally, another striking point in the report is that the Max Pain level is $104,000. As option open positions have reached record levels, this threshold has become increasingly critical this year. On the futures side, the outlook is a bit more relaxed. QCP noted that the negative turn of funding rates indicates that long leveraged positions have been cleared and that the market's overheating risk has decreased, meaning it has become healthier.