As financial markets around the globe exhibit caution, Bitcoin has managed to hold firmly above the $40,000 threshold. Investors’ focus is now trained on the forthcoming U.S. gross domestic product (GDP) report, anticipated to shed light on the economic performance of the fourth quarter.

____________________________________________________

• Bitcoin maintains its position above $40,000 amid cautious global market sentiment as investors await U.S. Q4 GDP data.
• Market recalibrates Federal Reserve interest rate cut expectations; reduced likelihood now seen in futures markets.
• Significant crypto options expiry on the horizon, with $3.75 billion in Bitcoin options and $2.07 billion in Ether options set to expire, potentially impacting market dynamics.

______________________________________________________________________

Bitcoin Sustains $40K Level as Market Eyes U.S. Economic Growth Data

During the European trading hours on Thursday, Bitcoin traded at $40,100 as of 09:38 UTC, showing signs of recovery from its weekly low near $38,500. Concurrently, the U.S. dollar index, which tracks the currency against a group of major currencies, stood at 103.70, a slight retraction from its Monday high of 103.82.

Market sentiment has seen a shift, with less aggressive predictions regarding the Federal Reserve’s potential rate cuts. Fed funds futures, a popular barometer for interest rate expectations, now indicate only a 50% chance of a rate cut by March, down starkly from 80% a month earlier. This reassessment comes amidst persistent inflationary pressures.

The spotlight is on the imminent U.S. GDP data, expected to be unveiled at 13:30 UTC. Analysts predict that the economy grew at a 2% annualized rate in the fourth quarter, decelerating from the previous quarter’s 4.9% rate. If confirmed, this would be the slowest pace of expansion since the second quarter of the prior year.

Additionally, the cryptocurrency sector is poised for a significant options expiry this Friday at 08:00 UTC. Bitcoin options contracts valued at $3.75 billion and Ether contracts worth $2.07 billion are set to expire on Deribit, the foremost crypto options exchange. This event is likely to influence market behaviour significantly.

Deribit’s Chief Commercial Officer, Luuk Strijers, has observed an uptick in bullish sentiment as seen by the rising call-put skew. Strijers also highlighted the trend of traders migrating their January expiry positions to February, in anticipation of market movements.

The “max pain point” for Bitcoin’s January expiry is expected to be at $41,000, with Ether’s at $2,300. This market theory posits that options sellers, often institutions with substantial capital, might seek to steer the market towards these levels, potentially amplifying losses for options buyers at expiration.

Don’t miss the opportunity to stay at the forefront of the dynamic cryptocurrency market. By subscribing to our newsletter, you’ll receive the most recent updates and expert analysis, empowering you to make well-informed financial decisions. Become part of our discerning readership, which is always a step ahead in understanding the complex world of digital currencies.