Bitcoin Bears Dominate: Odds of Year-end Price Below $90,000 Rise

Cryptocurrency

Summary:

Bitcoin was last down 4.2% at $86,681.41 on Thursday, after earlier falling to a ‌seven-month low. It rose to an all-time peak of $126,223.18 in early October.

The likelihood of bitcoin ending the year below $90,000 has risen to 50%, according to online options platform Derive.xyz, as traders ramped up hedging against more declines in the world's largest cryptocurrency.

On the other hand, the options market has assigned just a 30% chance of bitcoin finishing 2025 above $100,000.

Bitcoin was last down 4.2% at $86,681.41 on Thursday, after earlier falling to a ‌seven-month low. It rose to an all-time peak of $126,223.18 in early October. So far this year, bitcoin has fallen more than 7%, on track for an annual decline -- the ‌first since 2022.

Bitcoin has also dropped below its 50-day and 200-day moving averages and has fallen out of favor with trend-following investors, analysts said.

"The BTC price is currently very tenuous and skewed to the downside," said Sean Dawson, head of research at Derive.xyz in Canberra, Australia.

"Previous bull drivers like lowered rates ... have fizzled out, stalling upward price momentum. In other words, there's very little to be bullish about on the horizon."

Dawson estimated that over the last 30 days, crypto liquidations in both long and short positions totaled ⁠$8.25 billion.

SIZEABLE CONCENTRATION OF BITCOIN PUTS

One of the main catalysts for ‌the decline in bitcoin has been the less dovish stance of several Federal Reserve officials, who are advising caution on further interest rate cuts and citing still-too-high inflation. This has diminished expectations of a rate cut next month and has weighed on bitcoin and other risk assets such as stocks.

He ‍added that "a powderkeg of volatility in tech valuations" could see bitcoin sink to $75,000 before the end of the year, although prices should quickly rebound from that level.

Derive.xyz also pointed to a sizeable concentration of bitcoin "puts," about 13,800 contracts, conferring the right to sell bitcoin at a strike price of $85,000 at the December 26 expiry. A put option gives the holder the right, but not the obligation, to sell bitcoin at a set strike price.

The trade reflects demand for downside protection if bitcoin falls below $85,000.

To be sure, some market ‌participants believe a turnaround in bitcoin is not far behind.

Sean Farrell, head of digital asset strategy at Fundstrat, wrote in his latest note that the "near-term risk/reward now looks more balanced." He said that even if this proves to be an unsustainable turn, conditions are ripe for a sharp bounce in bitcoin.

Farrell said oversold signals are now starting to flash after bitcoin hit a seven-month low below $90,000, calling it a "potential value zone" that could attract buyers. He also said the latest selloff had cleared the market of last week's "forced and motivated sellers."

OPTIONS VOLATILITY SPIKES ACROSS THE BOARD

That said, other options indicators are flashing bearish signals.

Bitcoin's so-called call-put "skew" has taken a beating. The ⁠call-put skew, which reflects market sentiment, refers to the difference in implied volatility between calls, which are options to buy, and puts, which are options to sell. This skew shows a preponderance of puts over calls.

The 30-day put skew has further dropped from -2.9% to -5.3%, which means traders are increasingly paying up for downside insurance as prices continue to soften.

Options volatility across the board has also spiked, according to Derive.xyz's Dawson. Thirty-day implied volatility ‍has jumped from 41% to 49% in ⁠just two weeks and long-term volatility -- 180 days -- has increased to 49% from 46%.

This surge in volatility underscores the uncertainty surrounding bitcoin's trajectory, a point that resonates with some bearish voices in the market.

Jack Janasiewicz, portfolio manager and lead portfolio strategist at Natixis Investment Managers Solutions, said his bearish ⁠view rests on bitcoin's utility and mass adoption even as he acknowledged its increasing institutional acceptance.

"Can you really buy coke with bitcoin down the street? Sure you can allocate 1% or 2% of your portfolio to bitcoin ‌in case it goes to $1 million," he said.

But if it goes to zero, an allocation of 1%-2% is not a big loss,‌ he added.

Source: Reuters

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Adam

Commodity

Gold wavered as traders mulled the Federal Reserve’s interest-rate path following a key US jobs report that showed a mixed labor market.

US job growth picked up in September, though the unemployment rate ticked higher. It will be the last jobs report the Fed sees before its Dec. 9-10 meeting, and officials are divided over whether the slowdown in the labor market justifies another rate cut then.

Given that the data showed job growth topping expectations, “there is no reason to think the Fed is going to be more aggressive on easing monetary policy,” said Bart Melek, global head of commodity strategy at TD Securities. “The market was already thinking a December cut is not a sure bet. The jobs data just confirms this.”

Prior to the print, swap traders had already priced out a rate reduction next month following the government’s cancellation of the October employment report. While slightly increasing their wagers of a December cut after the jobs report, the traders still see a less than 50% chance of a rate reduction next month. Bullion typically underperforms in a higher rate environment.

Gold has rallied strongly this year, gaining more than 50% and hitting a record in October before retracing some of its gains. The advance has been supported by two earlier rate cuts from the Fed, as well as elevated central-bank buying and inflows into bullion-backed exchange-traded funds.

Gold slipped 0.2% to 4,070.34 an ounce at 11:21 a.m. in New York. The Bloomberg Dollar Spot Index was flat. Silver, platinum and palladium all fell.

Source: Bloomberg

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Adam

Economic

It marks a sharp rebound after job gains had slowed markedly earlier in the year. The three-month moving average fell to 29,000 following the August report.

More broadly, the picture is mixed. Revisions for the two previous months were negative (-33,000 jobs), while the unemployment rate ticked up slightly, from 4.3% to 4.4%.

On weekly jobless claims, filings came in at 220,000, versus an estimate of 227,000. However, continuing claims edged up to 1.97 million.

Shortly after the report, expectations for a December rate cut by the Fed rose somewhat, but remain in the minority (around 40%). A rate hold at the next Fed meeting also remains our preferred scenario.

Indeed, there is nothing in these figures to shift the Fed's members' positions: as the minutes showed, the Fed is divided.

In the minutes, it is written that many participants suggested that, given their economic projections, it would probably be desirable to keep rates unchanged for the rest of the year. Conversely, several participants judged that additional patience (...) would be appropriate in December if the economy evolves as they expect.

A tone suggesting the second camp is in the minority. Since that meeting, there has been more talk of a hold in December. Minneapolis Fed President Neel Kashkari even said he thought the October cut was not necessary.

The September employment report was, in any case, the last major data point before the December 9/10 meeting.

Indeed, the Bureau of Labor Statistics (BLS) said yesterday there would be no October employment report. Jobs created in October will be included in the November report. And that report will be published only on December 16, a week after the Fed meeting.

Retail sales and producer prices for September will be released on Tuesday. The JOLTS survey will be delayed to December 9, while the October survey is canceled.

Source: marketscreener

To stay updated on all economic events of today, please check out our Economic calendar

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Justin

Russia-Ukraine Conflict

At this point Axios, the Financial Times, the NY Times, and Ukrainian regional media have all said that the new peace plan being 'secretly' pushed by the Trump administration contains significant territorial concessions. Additionally, there are reportedly stipulations that would see Ukraine scale back its armed forces, stop receiving some Western weapons, and stops hosting all foreign troops.

A source has also told RBC-Ukraine that a key provision is that the Ukrainian government commits to a formal refusal for future NATO membership. The same report said things are taken further, as Russian officials and troops would receive amnesty for all wartime crimes.

Via Reuters

Additionally, international and US-led sanctions would reportedly be lifted on Moscow, paving the way for Russia's return to the global economy.

The US-proposed 28-point peace plan would cede control of the eastern Donbas to Russia, but other partially controlled territories like Zaporizhzhia and Kherson regions would see concessions made by Russia.

As we featured previously, Kremlin officials have finally said their position is being 'heard' - especially given this is the first time Washington appears to be getting serious about pushing territorial concessions.

The plan appears to have been primarily drafted by President Donald Trump's envoy Steve Witkoff and Russian special envoy Kirill Dmitriev - but so far the Zelensky government has expressed dismay that it is being cut out of the process.

US Secretary of State Marco Rubio has since written on X that achieving a "durable peace will require both sides to agree to difficult but necessary concessions."

He acknowledged current talks are all about consulting both sides in order to "develop a list of potential ideas for ending this war."

On Thursday US Army and top Pentagon representatives are in the Ukrainian capital in an effort to pressure the Zelensky government into engaging in talks on the US-Moscow peace plan:

Senior Pentagon officials have arrived in Ukraine to "discuss efforts to end the war" with Russia, the US military has said.

The team, led by US Army Secretary Dan Driscoll, held talks with Ukrainian Prime Minister Yulia Svyrydenko on Thursday morning. They are expected to meet Ukrainian President Volodymyr Zelensky later in the day.

But it remains that Zelensky has throughout the war consistently rejected any proposal which features territorial concessions. He is supported especially be Ukrainian hardliners, both in the military and in parliament.

However, fresh news headlines say Zelensky has expressed 'openness' to working with this framework:

ZELENSKIY: UKRAINE IS READY TO WORK WITH US, EUROPE FOR PEACE
ZELENSKIY SAYS HE AGREED TO WORK ON US DRAFT PLAN TO END WAR
OIL TURNS NEGATIVE AS ZELENSKIY SIGNALS OPENNESS TO PEACE TALKS

But already (and somewhat predictably) European hawks are chiming in negatively, urging Kiev against any 'compromise' with Moscow. "EU foreign policy chief Kaja Kallas warned that for any plan to work, it would need to have Ukrainians and their European allies on board," BBC writes.

French Foreign Minister Jean-Noël Barrot has seconded this viewpoint, saying "the Ukrainians do not want any form of capitulation."

Source: Zero Hedge

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Devin

Central Bank

On November 21, Federal Reserve Chair Jerome Powell addressed potential asset price drops, stating they are unlikely to threaten the financial system, at a public briefing in Washington, D.C.

While not posing an immediate threat, these potential asset declines could influence market sentiment and decisions across various financial sectors, including impacts on cryptocurrency trading and investment patterns.

Fed's Guidance and Market Dynamics

Federal Reserve Chair Jerome Powell recently addressed the possibility of a substantial asset price decline, yet highlighted that such an event would not endanger the financial system. This announcement aligns with the Fed's measured economic signals, focusing on liquidity and future policy adaptations. A notable statement by Powell was:

Post-announcement market behaviors showed an immediate response, with traditional and digital asset risks seemingly adjusted. Despite lacking specific Fed commentary on cryptocurrencies, these sectors often react to changes in monetary policy directions.

"A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it. Policy is not on a preset course."

Market reactions varied, with stakeholders eyeing the Fed's liquidity adjustments following interest rate and balance sheet policy shifts. Governor Powell's message was particularly scrutinized, reflecting the broader market's cautious sentiment towards future economic stability.

Source: CryptoSlate

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Devin

Central Bank

Cleveland Fed President Beth Hammack voiced concern at the Economic Club of New York regarding potential inflation risks if the Federal Reserve continues to implement rate cuts.

Hammack's remarks could signal higher rates persisting, impacting expectations in financial and cryptocurrency markets, with possible increased volatility in Bitcoin and Ethereum.

Cleveland Fed President Beth Hammack recently warned that more rate cuts could prolong elevated inflation risks in the U.S. economy. Her remarks highlighted concerns following the Fed's recent quarter-point rate reduction.

Beth Hammack opposes further loosening of monetary policy, citing projections of high inflation continuing through 2026. Her stance contradicts prior market expectations of further rate reductions in the coming year. She stated, "I remain concerned about high inflation and believe policy should be leaning against it."

The market anticipates a higher-for-longer interest rate environment, likely increasing market volatility and uncertainty as the Federal Open Market Committee's meeting approaches. Investors are wary of a potential economic slowdown.

Hammack's warning could influence crypto markets, especially Bitcoin and Ethereum, as tighter monetary policies often impact liquidity and asset prices. Historically, hawkish policy leads to DeFi TVL outflows.

Institutional investors may adopt caution, impacting flows into both crypto and traditional markets. Many are now re-evaluating their positions ahead of expected policy shifts.

Insights suggest potential for financial and regulatory impacts, with a history of hawkish pivots leading to sell-offs in crypto. Past policy shifts have resulted in price corrections in major assets like Bitcoin and Ethereum.

Source: CryptoSlate

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Adam

Economic

A big tech borrowing bonanza and signs of strain in private credit are spooking bond market lenders to the world's top-rated businesses, in a trend that could jolt funding costs higher, hit corporate earnings and add stress to twitchy global markets.

A cross-market rout sparked by AI over-investment nerves and what delayed U.S. data might mean for monetary policy has pushed world stocks down 3% this month and knocked everything from cryptocurrency bitcoin to gold (.XAU). But investment-grade bonds, which still offer borrowers the cheapest funding costs seen in decades, have been spared.

Investors at groups managing more than $10 trillion of client assets combined, however, expressed concerns about IG debt pricing or said they were reducing exposure to top-rated bonds, with some also having sold out of or begun actively betting against the asset class.

After JPMorgan boss Jamie Dimon warned last month about "cockroaches" emerging in credit markets, tech giants began borrowing heavily to fund their rush to build AI data centres.

Alternative asset BWL.N> sent waves of anxiety through the $3 trillion private credit market by moving to limit fund withdrawals, and IG debt was still not pricing enough risk, money managers said.

"There's fear in markets, and everyone's looking for the next shoe to drop," said Brian Kloss, portfolio manager at Brandywine Global in Philadelphia, a unit of Franklin Templeton, which runs $1.2 trillion of assets, and has an overall cautious stance on credit.

That could well be IG debt, Kloss said, meaning he was "taking profits" on existing holdings.

An ICE-BofA index tracking what top-rated U.S. companies pay to borrow over governments is trading just 10 basis points (bps) above 27-year lows of 74 bps touched in early October (.MERC0A0). The equivalent so-called spread in Europe is around 84, up slightly from 75 in late October (.MERPE00).

Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, had a short position against IG debt because pricing was too rich and an economic downturn might bring a "proper blowout".

Because prices had far to fall, he added, IG credit offered the most "bang for buck" in terms of hedging strategies that would pay out if a sustained economic downturn took hold.

AI borrowing binge prompts investors to back away from corporate bonds_1

Premium high-yield and investment grade US businesses pay to borrow over government rates reflects optimism about economic growth and demand for debt.

FEEDBACK LOOP

Credit spreads are a leading indicator for economic growth and stock market performance because funding costs affect businesses' profits, share prices and expansion plans.

"There's a feedback loop," said John Stopford, head of multi-asset income at asset manager Ninety One, adding he had dropped his funds' credit exposure to zero in recent weeks.

Interest rates on newly issued bonds would get more expensive, he said, if cash drained out of private credit funds while an AI borrowing bonanza ramped up.

"If the cost of borrowing goes up in private credit and there is lots of new issuance coming out, borrowers are going to have to pay up," he said. "And if it's more expensive for businesses to borrow they are going to make less money."

AI borrowing binge prompts investors to back away from corporate bonds_2

A chart showing year-to-date share-price performance for Blue Owl versus peers and the S&P BDC Index

After $75 billion of U.S. investment grade debt issued by AI-focused Big Tech hit the market in September and October the cost of five-year credit default swaps insuring against tech group Oracle defaulting has risen 44% in a month to 87 bps, Refinitiv data showed.

Meanwhile, investors have begun moving away from private debt funds as their lending standards come under scrutiny from regulators.

INVESTORS SEE DELAYED US DATA AS RISK FOR CREDIT MARKETS

David Furey, State Street Investment Management's head of fixed income portfolio strategy, said the world's fourth-biggest asset manager was staying invested in corporate credit for now but keeping a "close eye" for signs of U.S. economic weakness. IG credit pricing, he cautioned, had "very little cushion baked in" for economic deterioration.

AI borrowing binge prompts investors to back away from corporate bonds_3

Credit default swap values have more than doubled since September

Jonathan Manning, credit portfolio manager at Europe's largest asset manager Amundi, said he was also "looking to lighten up a little bit" on IG credit because of high pricing and in case delayed U.S. data such as Thursday's September jobs report increased volatility in a market that has traded calmly through selloffs so far.

Clients of Russell Investments, which advises institutions stewarding more than $900 billion between them, were also turning more cautious on IG credit.

"It's not so much that this is the asset class that they are most worried about. It's the asset class that's got very expensive so the upside isn't really there anymore," said Russell's global head of fixed income and FX solutions Van Luu.