BTC price may fall due to SEC crackdown on exchanges and its impact on Bitcoin rebound.

Bitcoin’s price experienced a setback after failing to retest the $27,400 resistance on June 6, indicating that investors became less confident following recent regulatory actions by the United States Securities and Exchange Commission (SEC) against Binance and blockchain. Both exchanges are facing lawsuits for multiple counts, including failure to register as licensed brokers and offering unregistered securities.

Blockchain Association CEO, Kristin Smith, suggests that the SEC is attempting to bypass formal rule-making processes and deny public engagement, while crypto analyst, Will Paige, believes that the SEC intends to police the space through enforcement in the absence of a regulatory framework. These criticisms may explain why investors are looking forward to the U.S. Financial Services Committee hearing scheduled for June 13.

The potential overreach of the SEC has caused multiple ripples, including in the U.S. legislature. For instance, Senator Bill Hagerty stated that regulators at the SEC are “weaponizing their role” and publicly called out SEC Chairman Gary Gensler.

Furthermore, the sudden increase in decentralized finance volumes further supports the thesis that the cryptocurrency space can function without crypto-banks, as the centralized exchanges are commonly known. The median trading volume across the top three decentralized exchanges (DEXs) increased by 444% between June 5 and June 7. As DEX volumes surged, net outflows on Binance reached $778 million, the difference between the value of assets entering and exiting the exchange.

Bitcoin (BTC) has been trying to reclaim the $27,000 support, but that might be harder than expected given the upcoming $670 million weekly options expiry on June 9. It is worth noting that the actual open interest for the June 9 expiry will be lower since bulls concentrated their wagers above $27,000. These traders got excessively optimistic after Bitcoin’s price gained 9% between May 25 and May 29, testing the $28,000 resistance.

The 0.63 put-to-call ratio reflects the imbalance between the $410 million in call (buy) open interest and the $260 million in put (sell) options. However, if Bitcoin’s price remains near $26,500 at 8:00 am UTC on June 9, only $38 million worth of these call (buy) options will be available. This difference happens because the right to buy Bitcoin at $27,000 or $28,000 is useless if BTC trades below that level on expiry.

Based on the current price action, there are four most likely scenarios. The number of options contracts available on June 9 for call (bull) and put (bear) instruments varies depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit.

This paragraph explains a rough estimate of the use of put options in bearish trades and call options in neutral-to-bullish trades. This estimate is not accurate as it does not consider more complex investment strategies.

On June 5, Bitcoin longs using futures contracts were liquidated, resulting in a loss of $100 million. This loss means that bulls may have less margin to try to increase the BTC price above $27,000. Therefore, it seems more likely that bears will profit from Friday’s options expiry.