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$1.1B in Bitcoin options expire on Friday, but data points to a sub-$55K BTC price


Bitcoin (BTC) bulls are nonetheless licking their wounds from the bloody Dec. 4 correction, which noticed the worth collapse from $57,000 all the best way to $42,000. This 26.5% draw back transfer brought on $850 million in lengthy BTC futures contracts to be liquidated, however extra importantly, it shifted the “Worry and Greed index” to its lowest stage since July 21.

Bitcoin/USD worth at FTX. Supply: TradingView

It’s in some way unusual to check each occasions, because the July 21 sub-$30,000 low would have erased all the features in 2021. In the meantime, the $42,000 low from Dec. 4 remains to be a 44% achieve year-to-date. Examine this in opposition to the S&P 500, which is up 21% in 2021, and the WTI oil worth, which has accrued a 41% achieve.

Bulls may be targeted on the Bitcoin reserves held at exchanges, which continues to descend and at present sits on the lowest stage in three years. In line with knowledge from CryptoQuant, there are actually lower than 2.27 million BTC deposited at exchanges and having fewer cash obtainable for buying and selling alerts that traders are unwilling to promote within the brief time period. It is a dynamic that many traders think about to be bullish.

Even with the obvious steadiness between name (purchase) and put (promote) choices on Friday’s $1.1 billion expiry, bears are higher positioned after Bitcoin stabilized barely above $50,000.

Bitcoin choices mixture open curiosity for Oct. 10. Supply: CoinGlass

A broader view utilizing the call-to-put ratio exhibits a modest 7% benefit to Bitcoin bulls as a result of the $555 million name (purchase) devices have a bigger open curiosity versus the $520 million put (promote) choices. Nevertheless, the 1.07 indicator is misleading as a result of the 11.5% worth drop over the previous week brought on most bullish bets to turn out to be nugatory.

For instance, if Bitcoin’s worth stays beneath $52,000 at 8:00 am UTC on Dec. 10, solely $50 million value of these name (purchase) choices will probably be obtainable. That impact occurs as a result of there isn’t a worth in the best to purchase Bitcoin at $55,000 whether it is buying and selling beneath such worth.

The numbers counsel that bulls are set for a significant loss

Under are the three most probably eventualities based mostly on the present worth motion. The variety of possibility contracts obtainable on Dec. 10 for bulls (name) and bear (put) devices differ relying on the expiry BTC worth. The imbalance favoring both sides constitutes the theoretical revenue:

  • Between $47,000 and $50,000: 400 calls vs. 6,600 places. The web result’s $300 million favoring the put (bear) devices.
  • Between $50,000 and $54,000: 1,700 calls vs. 4,700 places. The web result’s $160 million favoring the put (bear) devices.
  • Above $54,000: 2,400 calls vs. 2,900 places. The web consequence favors the put (bear) choices by $30 million.

This crude estimate considers the decision choices being utilized in bullish bets and the put choices which are completely in neutral-to-bearish trades. Even so, this oversimplification disregards extra complicated funding methods.

As an example, a dealer might have bought a name possibility, successfully gaining a unfavorable publicity to Bitcoin above a selected worth. However, sadly, there’s no straightforward strategy to estimate this impact.

Bears will do their finest to carry BTC beneath $50,000

Bitcoin bears want a delicate push to sub-$50,000 to attain a $300 million revenue. However, bulls would wish a 7.2% worth restoration from the present $50,500 to scale back their loss by half.

Contemplating the $2 billion liquidation of leverage lengthy positions on Dec. 4, bulls are probably making an attempt to remain afloat and will probably be unwilling so as to add extra threat proper now. It might be unnecessarily ineffective for bullish traders to waste their efforts making an attempt to salvage this short-term loss.

So, on this occasion, bears look set to keep up the higher hand on this weekly choices expiry.

The views and opinions expressed listed here are solely these of the author and don’t essentially mirror the views of Cointelegraph. Each funding and buying and selling transfer includes threat. You need to conduct your personal analysis when making a call.