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

BTC's rally has stalled amid hawkish comments from the Fed officials.

Bitcoin’s recent rally has stalled amid hawkish comments from the Federal Reserve officials, sparking concerns over a potential price pullback.

However, developments in the Deribit-listed options market tied to the cryptocurrency are also hinting at a higher probability of BTC trading at lower prices in the upcoming sessions.

Specifically, the implied probability distribution – a representation of markets' expectations for the underlying asset's future price derived from options prices at different strike prices and expiration dates – is now showing a “left shift.” This suggests that a majority of the market participants are bracing for a pullback from the current levels, as per crypto financial platform BloFin.

"A typical indicator is the implied probability distribution: whether it is MSTR, COIN or Deribit's BTC options, the implied probability distribution of different expiration dates has shown a significant left shift," Griffin Ardern, head of options trading and research at BloFin, told CoinDesk in a Telegram chat. "It seems that traders have an implied consensus that the prices of BTC and altcoins are still high, and more pullbacks may be on the way."

Ardern added that a similar left shift was observed in the DJT options market ahead of the recent slide in the stock. The share price has since halved to $27 in just over two weeks, as per charting platform TradingView. DJT shares had soared to a high of $54 at the end of October as markets priced in a potential victory of Republican candidate Donald Trump's victory in the U.S. election held on Nov. 5.

After Trump's victory, BTC has surged by over $20,000, tapping the $93,000 mark at one point. The cryptocurrency was last seen changing hands at $88,100, as per CoinDesk data.

Hawkish comments from the Fed officials are also bolstering the case for a price pullback, as highlighted by the implied volatility distribution. On Thursday, Chairman Jerome Powell said that the economy is not sending any signals that we need to be in a hurry to lower rates, dashing hopes for faster liquidity easing. The Fed has already cut rates by 75 basis points since September, offering bullish cues to risk assets.

That said, the majority of the market participants are still betting on a potential price rise beyond the $100,000 barrier, as evident from the market trades.