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Why did the price of bitcoin quickly rise to the level of $ 48,500 and then close annually below $ 47 thousand?

Why did the price of bitcoin quickly rise to the level of $ 48,500 and then close annually below $ 47 thousand?

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Answer Why did the price of bitcoin quickly rise to the level of $ 48,500 and then close annually below $ 47 thousand?

Last year, i.e. yesterday night 🙂 The price of bitcoin quickly rose to the level of $ 48,500, which made the audience of traders optimistic about the possibility of the bitcoin price closing above this important number, and more optimism increased about the possibility of the bitcoin price closing above the $ 50 thousand level.

But on the evening of December 31, the price of Bitcoin fell and closed the year 2021 at the level of $ 46,200 on the Binance platform.

What is the reason for the rapid pumping in the price of Bitcoin?

Bitcoin decided to make a great gift by the end of the year with a rapid price pump of 3% and then the price fell to lower levels later.

Read:Rare cards on Ethereum representing crypto characters are sold at attractive prices

Some traders assumed that the sudden buying power in the market emerged due to the long-awaited technical recovery by the oversold market.

But the real reason lies in the December options expiration with a maximum pain price below $47,000.

After expiration, the next options contracts become the market’s primary tool for hedging positions, or betting on the next bitcoin price in the specified period.

Since bitcoin tends to follow derivatives rather than trends in the spot market, options and futures are two major determinants in the price formation process.

Options expiration does not directly affect the price, instead, the maximum pain price of the options can serve as a guideline for spot traders.

At press time, Bitcoin has entered 2022 with a “green day” and a price increase of nearly 3%.

But unfortunately for cryptocurrency investors, the largest cryptocurrency in the market has lost 30% of its value since its all-time high.

During 2021, Bitcoin experienced several downside cycles after which the rally started which led to strong recovery and corrections.

Read:Someone makes $50,000 a week on Binance while they sleep

Now, Bitcoin is trading at September, April and February 2021 levels.

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