The stock market can offer valuable insights into possible Bitcoin (BTC) price movements, with a significant potential trigger expected this month.
Q2 earnings numbers due this month
Notably, Q2 earnings numbers are expected from some of the largest companies in the world in July, including:
- UnitedHealth, Citigroup and JPMorgan on July 14.
- Bank of America and Morgan Stanley on July 18.
- Tesla, Google, Apple, Meta, Microsoft and Amazon before July 27.
The S&P 500 companies account for an aggregate $36.5 trillion in market capitalization, so it makes sense to expect a positive impact on Bitcoin’s price if the earnings season sustains modest growth.
In other words, investors’ appetite for risk-on assets will increase if the odds of an imminent recession are reduced.
Leverage to be avoided given the level of uncertainty
Traders calling for a global economic slowdown will have a chance to profit if those companies fail to deliver earnings growth, further adding uncertainty to the economies. Governments rely heavily on taxes from companies and consumers, so a weak earnings season represents a serious threat.
Related: How to financially prepare for a recession
Investors are concerned that companies’ profitability could decline due to the unprecedented tightening of monetary policy by the United States Federal Reserve and macroeconomic concerns. And thanks to persistent inflation, businesses are forced to reduce hiring and use cost-cutting strategies.
Still, the U.S. economy has displayed resilience, as evidenced by the latest 0.3% retail sales growth month-over-month in May, with economists expecting a decline. The retail results demonstrated that decreasing oil prices may be allowing consumers to spend more money on other goods.
Such a scenario explains why professional traders have used the bullish “iron condor” strategy to maximize gains with limited risk if Bitcoin trades above $31,550 in July.
Using Bitcoin options for a bullish but hedged strategy
Buying Bitcoin futures pays off during bull markets, but the issue lies in dealing with liquidations when BTC’s price drops. This is why professional traders use options strategies to maximize their gains and limit their losses.
Related: Crypto derivatives 101: A beginner’s guide on crypto futures, crypto options and perpetual contracts
The skewed iron condor strategy can yield profits above $31,550 by the end of July while limiting losses if the expiry price is below $31,000.
It is worth noting that Bitcoin…
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