Is Bitcoin on Shaky Ground? Market Signals Reflect Patterns That Foretold the Recent Slide in Trump Media Shares

As a seasoned analyst with over two decades of experience in financial markets, I’ve seen my fair share of market dynamics and patterns that repeat themselves across various assets. The current situation with Bitcoin (BTC) seems strikingly similar to what happened with Trump Media Group shares before their recent slide.

With Bitcoin‘s (BTC) price finding it difficult to maintain a position above $90,000, the behavior in the Deribit options market linked to the cryptocurrency mirrors trends that hinted at the recent plunge in Trump Media Group stocks.

This pattern being discussed relates to an assumed likelihood distribution, which reflects the collective predictions of market participants regarding the potential future value of the underlying asset. This is constructed using options prices across various strike prices and expiry times. Essentially, it displays the odds that traders believe the asset will reach specific price thresholds.

According to statistics monitored by crypto finance platform BloFin, the current probability distribution indicates a “movement towards the left,” which means that traders anticipate a greater likelihood of Bitcoin’s price falling in the near future.

According to Griffin Ardern, head of options trading and research at crypto financial platform BloFin, a common measure is the Implied Probability Distribution. This can be seen in MSTR, COIN, or Deribit’s BTC options. The distribution of various expiration dates for these options has shown a notable shift to the left, indicating that traders collectively believe that the prices of Bitcoin and altcoins are still high, suggesting potential further price drops might occur.

Prime Minister Ardern pointed out that there was a comparable move to the left in the DJT options market, which seemed to predict the recent drop in price. The share price has dropped by half to $27 within two weeks, as indicated by TradingView’s charting platform. Initially, DJT reached a peak of $54 at the end of October, as the markets anticipated a possible victory for Republican candidate Donald Trump in the U.S. election on November 5th.

Indeed, as anticipated, a supporter of cryptocurrency, Trump, triumphed, leading to an upward trend in Bitcoin’s value. In fact, it soared above $20,000 and reached a peak of nearly $93,000 at one instance.

As of writing, the cryptocurrency changed hands at $88,100, according to CoinDesk data.

Remarks from Federal Reserve officials indicating a more aggressive stance are aligned with the prediction of a potential price decrease suggested by the volatility distribution. On Thursday, Chair Jerome Powell stated that the economy doesn’t seem to necessitate immediate rate reductions, thus diminishing expectations for quicker monetary easing. Since September, the Fed has already reduced rates by 0.75%, which has been interpreted as a positive signal for risky assets.

In summary, it appears that many players within the market remain optimistic, placing wagers anticipating profits if the price surpasses the $100,000 mark and continues to climb.