Bitcoin's market continues to demonstrate its resilience and evolving opportunities. With a substantial $5.5 billion in Bitcoin options set to expire on July 26, the cryptocurrency faces intense pressure from significant sell-offs by entities like the Mt. Gox estate and Genesis Trading. Simultaneously, a new fund has emerged, offering Bitcoin holders a unique pathway to European Union citizenship through Portugal’s golden visa program, reflecting the innovative use of digital assets in traditional frameworks. Amid these developments, Bitcoin’s price reached a 40-day high, driven by favorable market conditions and investor optimism.
Bitcoin's Surging Demand and Its Impact on Short-Term Holders
Bitcoin (BTC) has recently experienced a significant rally, driven by mounting demand-side pressure, leading to a remarkable increase of over 23% in just two weeks. This surge brought the cryptocurrency to a two-month high of $68,583 on July 22. According to market intelligence firm Glassnode, this rally marks a crucial milestone for the prevailing uptrend, as BTC climbed above its short-term holder (STH) cost basis.
Glassnode highlighted the significance of Bitcoin's rise above $68,000, noting that it has provided much-needed relief for short-term holders. In its "Week On-chain" newsletter published on July 24, Glassnode explained that more than 90% of this cohort's supply fell into a loss following the downturn to $53,500 on July 5. This situation put short-term holders under financial strain. However, the recent price rally has reversed this trend, bringing 75% of their held supply back to an unrealized profit.
The STH cost basis, or realized price, is a metric representing the average acquisition price of Bitcoin for short-term investors, defined as those holding coins for less than 155 days. Data from LookIntoBitcoin indicated that BTC's breach of the $68,000 level on July 22 saw it rise above the STH realized price, which was $65,329 at the time. This recovery also pulled the MVRV (Market Value to Realized Value) ratio of all STH cohorts above 1, indicating that all short-term holders have returned to positive profitability.
Crazzyblockk, a pseudonymous analyst at CryptoQuant, emphasized the importance of the MVRV ratio in Bitcoin analysis. The ratio's return above the STH cost basis is crucial for maintaining a bullish outlook and encouraging new capital inflows into the market. "Historical Bitcoin price cycles, based on holder behavior logic, emphasize the importance of price stabilization and a bullish market sentiment above the average cost basis of short-term investors," stated Crazzyblockk.
Spot Bitcoin ETF Flows
Despite the bullish trends in Bitcoin's price, the spot Bitcoin exchange-traded funds (ETFs) experienced outflows on July 23, totaling $77.92 million, ending a twelve-day streak of inflows. According to SoSo Value, Bitwise’s ETF BIBT led net outflows with $70.3 million, followed by 21Share’s Bitcoin ETF ARKB with $52.3 million in outflows, and Grayscale ETF GBTC with $27.3 million in net outflows. In contrast, BlackRock’s ETF IBIT was the only fund with inflows of $71.9 million, while the remaining ETFs saw no flows.
Since the beginning of the year, the 10 spot Bitcoin funds that started trading on Jan. 11 have witnessed net inflows of $17.5 billion, with assets under management exceeding $59.97 billion. The recent inflows are the highest since May, when the spot Bitcoin ETFs posted total net inflows exceeding $4 billion between May 13 and June 7.
Bitcoin's $5.5 Billion Options Expiry: Market Dynamics and Key Scenarios
In the early hours of July 26, the Bitcoin (BTC) market is poised for a significant event as $5.5 billion in options contracts are set to expire. This month’s expiry is particularly noteworthy due to the intense negative pressure Bitcoin's price has faced from multiple sources, including the Mt. Gox bankruptcy proceedings distribution, substantial Bitcoin sales by the German government, and asset liquidation by the failed Genesis Trading firm.
On July 24, the Mt. Gox estate transferred 42,583 BTC to a couple of addresses, likely preparing to distribute these funds to creditors. These funds had been withheld for over a decade since the collapse of the Japan-based exchange. The German government also completed the sale of its remaining Bitcoin holdings on July 12. Additionally, Genesis Trading, part of the bankrupt Digital Currency Group, transferred 14,000 BTC to Coinbase between June 12 and July 17, signaling potential asset liquidation. Notably, Genesis Trading still holds 32,256 BTC, according to Arkham Intelligence, and has been ordered by a US court to repay investors $2 billion.
These significant sales have created substantial sell pressure, making many Bitcoin call options worthless. Despite the aggressive sell-offs, Bitcoin ETFs have recorded inflows of $2.84 billion since July 5, as reported by Farside Investors. This selling pressure explains why Bitcoin's price dipped below $55,000 on July 8.
The options market is particularly telling, with most put options (bets on price declines) positioned at $60,000 or lower, while call options (bets on price increases) aimed for $70,000 and higher. The put-to-call open interest heavily favors call options, but this does not necessarily advantage neutral-to-bullish strategies.
Key Players in the Options Market
Deribit leads the market for the July BTC options expiry, with $4 billion in open interest. The Chicago Mercantile Exchange (CME) follows with $800 million, OKX with $400 million, and Binance with $300 million. Altogether, the combined call and put BTC options for July total $5.5 billion. However, if Bitcoin stays near $66,500 on July 26 at 8:00 am UTC, the rights to buy BTC at $68,000 and $70,000 will not be exercised, nor will the put options below $66,000, making the aggregate open interest figure somewhat misleading.
The put-to-call ratio of 0.62 reflects an imbalance between the $2.5 billion call open interest and the $1.5 billion put options. If Bitcoin's price remains below $67,000 at 8:00 am UTC on July 26, only $560 million worth of call options will be exercised.
Here are the four most likely scenarios at Deribit based on current price trends and the availability of options contracts for calls and puts on July 26:
- Between $62,000 and $64,000: 2,780 calls versus 5,830 puts. This scenario favors the put (sell) options by $190 million.
- Between $64,000 and $66,000: 4,260 calls versus 3,950 puts. The net result is balanced between call and put options.
- Between $66,000 and $67,000: 6,270 calls versus 2,300 puts. This scenario favors the call (buy) options by $260 million.
- Between $67,000 and $68,000: 8,060 calls versus 1,600 puts. This outcome favors the call (buy) options by $430 million.
The expiry of these options will likely set the stage for Bitcoin's short-term price direction. Should Bitcoin remain below key resistance levels, many call options will expire worthless, potentially putting further downward pressure on the price. Conversely, if the price breaks above these levels, it could lead to a bullish momentum, driven by the exercise of call options and increased investor confidence.
New Fund Offers Bitcoin Holders Path to EU Citizenship through Portugal's Golden Visa Program
A groundbreaking initiative has emerged, allowing Bitcoin holders to gain European Union citizenship by investing in Portugal’s golden visa program. This innovative approach was announced by Alessandro Palombo, the co-founder and CEO of Unbound Fund, in a post on X. Palombo revealed that their fund is the first to be eligible for the Portuguese golden visa program by providing exposure to Bitcoin.
Palombo claims that investors who indirectly hold Bitcoin worth 500,000 euros (approximately $542,000) through the Unbound Fund will be eligible for the Portugal Golden Residence Permit Program. This program offers a five-year residence-by-investment opportunity for non-EU nationals, eventually leading to Portuguese citizenship.
The Unbound Fund's strategy involves investing in companies that hold Bitcoin passively, without attempting to time the market for selling BTC. Additionally, the fund will invest in BlackRock ETFs to ensure security and simplicity for investors. Palombo emphasized the innovative nature of using Bitcoin as a tool for gaining freedom of movement, aligning it with Portugal's welcoming stance towards such initiatives.
“I believe it’s time to use Bitcoin as a tool for freedom of movement in a mutually beneficial way with Portugal, a country I have chosen to live in with my family,” Palombo wrote. He further noted that for technical and strategic reasons, the European citizen-by-investment program is the best option available.
Palombo mentioned that the fund has already onboarded customers and is in discussions with complementary teams to expand the initiative. This development comes at a time when Bitcoin is experiencing significant market activity.
Bitcoin’s Market Performance
On July 22, Bitcoin’s price reached its highest level in 40 days, peaking at $68,518 on some platforms. Analysts attribute the nearly 20% gain over ten days to the conclusion of the German government’s Bitcoin sell-off and increased investor confidence in the possibility of the United States Federal Reserve cutting interest rates in 2024. The bullish momentum also caused the Bitcoin futures premium, a sentiment gauge for professional traders, to reach its highest level in five weeks. There is speculation that if the trend continues, Bitcoin could breach the $72,000 milestone.
The Unbound Fund's approach offers a unique blend of investment in Bitcoin and the opportunity to gain EU citizenship through Portugal's golden visa program. For Bitcoin holders, this presents a compelling option to leverage their digital assets for long-term benefits, including the possibility of European residency and citizenship.
This initiative could set a precedent for similar programs in other jurisdictions, potentially integrating cryptocurrency investments with traditional residency and citizenship programs. As Bitcoin continues to gain acceptance and recognition globally, such innovative investment pathways are likely to become more prevalent.
