What is Bitcoin’s “Real Max Pain” Point? Here’s what you should know
Bitcoin’s price remains in a downtrend as we approach the final Federal Reserve Board meeting of the year. The value of the Royal Crypt has decreased by 1.05% in the previous twenty-four hours and by 1.66% in the last seven days at the time of writing.
After the recent weekly close, the Bitcoin to US Dollar exchange rate showed almost little upward momentum before the opening of trade on Wall Street on December 12th. The major cryptocurrency is still trading within a fairly tight range, and market watchers are becoming more eager for new triggers to drive price action.
Traders are now in a state of uncertainty and do not know how to do business in such a market. It would be wise for them to examine the options markets to determine whether Bitcoin will eventually succumb to the negative news flow or not.
Analyst Splits Opinion on BTC Max Pain Point
While it is reasonable to conclude that another Bitcoin price decline would force many hodlers to rethink their investment approach, it remains unclear whether or not this bear market will be similar to those that have come before it.
In Bitcoin’s past history, bear market bottoms were accompanied by at least 60 percent of the BTC supply being exchanged at a loss. This was the case when the market was at its lowest point. To this point, the market has almost, but not quite, followed this trend.
But as an analyst Mags clarified in his Twitter post, this does not suggest that the real point of maximum pain is just around the corner. Mags is a cryptocurrency trader as well as a technical analyst, and he claims to have held Bitcoin since 2016.
What is the maximum pain point?
The “Max Pain” or “Max Pain Point” is the striking price point at which the largest number of option contracts are currently active, and the price at which the asset would result in a loss for the most option holders upon expiration.
Simply put, “maximum pain” refers to the time when option buyers stand to lose the most money. Conversely, option sellers may have the greatest advantage.
In Mag’s words:
“$10k – $14k won’t be maximum pain for the majority because most of you are prepared for it! The real maximum pain is the price moving in the $500 range for months.”
He also said that most individuals would lose a significant amount of money due to excessive trading within a 2% flat range, adding that “as long as BTC is doing something (in all directions), we’re good”.
Meanwhile, as 2023 approaches, crypto enthusiasts are speculating on what will be the lowest potential price for cryptocurrencies. The failure of the exchange FTX has further compounded Bitcoin’s problems.
Some experts predict that by 2023, Bitcoin’s price may unexpectedly drop to the $5,000 range. If that happened, the current price of $16,900 would be reduced by another 70% then.
The decline or success of the crypto king will be affected by inflation, interest rates and the presumably coming recession. As we enter the year 2023, we can only hope that they will be lower.
Final thoughts
Analyst Mags’ claims have been largely corroborated by the crypto community. Some others are holding out hope that Mags’ prediction will come true, so they may wait until later to invest in the leading cryptocurrency.
Interest in Bitcoin’s future performance among community members appears to be high. Where is it going, up or down?
