$ 32K Bitcoin price could turn the tide when $ 160M BTC options expire on Friday

$ 32K Bitcoin price could turn the tide when $ 160M BTC options expire on Friday – Mail Bonus


Twenty-three torturous days have passed since Bitcoin (BTC) last closed above $ 32,000 and the 10% increase that took place on May 29 and 30 is evaporating when BTC prices return to $ 30,000. The move back to $ 30,000 simply confirms a strong correlation with traditional assets, and over the same period the S&P 500 also declined 0.6%.

Bitcoin / USD 12 hour price in Kraken. Source: TradingView

Lower corporate profits could put pressure on the stock market due to rising inflation and the expected rise in US Federal Reserve rates, according to Jamie Fahy, Citi’s analyst. As reported by Yahoo! Finance, Citi’s customer research report said:

“In general, despite concerns about a contraction, expectations of earnings per share for 2022/2023 have hardly changed.

In short, the investment bank expects deteriorating macroeconomic conditions to reduce corporate profits and, in turn, cause investors to repay the stock market lower.

According to Jeremy Grantham, co-founder and chief investment officer of GMOs, “we should be in some kind of recession pretty soon and profit margins from the real peak are a long way from where it can decrease.”

As the correlation with the S&P 500 is still unbelievably high, Bitcoin investors fear that a possible decline in the stock market will inevitably lead to a re-examination at the $ 28,000 level.

S&P 500 and Bitcoin / USD 30 day correlation. Source: TradingView

The correlation measurement ranges from negative 1, which means that selected markets move in opposite directions, up to positive 1, which reflects perfect and symmetrical movement. Inequality or lack of connection between the two assets would be denoted by 0.

The S&P 500 and Bitcoin currently have a 30-day correlation of 0.88, which has been the norm in recent months.

Bearish bets are mostly under $ 31,000

The recovery of Bitcoin over $ 31,000 on May 30th came as a surprise to the bear as only 20% of the sale (sell) options before June 3rd have been placed above such prices.

Bitcoin bulls may have been deceived by a recent $ 32,000 resistance test and their $ 825 million bet options all the way up to $ 50,000.

Bitcoin options gather open interest rates before June 3rd. Source: CoinGlass

A broader view using a 0.77 call-to-sell ratio shows more bets because the sell (sell) open interest rate stands at $ 465 million against the $ 360 million call (buy) option. Nevertheless, with Bitcoin standing at $ 31,000, most bearish bets are likely to be worthless.

If the Bitcoin price stays above $ 31,000 at 8:00 UTC on June 3, only $ 90 million worth of these (selling) options will be available. This difference occurs because there is no use in the right to sell Bitcoin at $ 31,000 if it trades above that level when it expires.

The Bulls could make $ 160 million in their own pockets

Below are four most likely situations based on current pricing action. The number of option contracts available on June 3 for buying (bull) and selling (bear) instruments varies, depending on the expiration price. The imbalance in favor of each party forms a theoretical gain:

  • Between $ 29,000 and $ 30,000: 1,100 calls against 5,100 sets. The net profit of the bears is about 115 million dollars.
  • Between $ 30,000 and $ 32,000: 4,400 calls against 4,000 sets. The net result is a balance between calling (buying) and selling (selling) instruments.
  • Between $ 32,000 and $ 33,000: 6,600 calls against 1,600 sets. The net result supports bulls up to 160 million dollars.
  • Between $ 33,000 and $ 34,000: 7,600 calls against 800 sets. The Bulls increase their profit to 225 million dollars.

This rough estimate takes into account the call options used in bullish betting and the put options only in neutral to bearish trading. Nevertheless, this oversimplification avoids more complex investment methods.

Bears have less margin needed to suppress Bitcoin prices

Bitcoin bears need to push the price below $ 30,000 on June 3 to secure a $ 115 million profit. On the other hand, the bulls’ best scenario requires pushing over $ 33,000 to increase their profits to $ 225 million.

However, the Bitcoin bears had a $ 289 million debt card position that ended May 29, according to Coinglass. As a result, they have less leeway needed to push prices lower in the short term.

That being said, the most likely scenario is a tie, causing the price of Bitcoin to be close to $ 31,000 before the June 3 options expire.

The views and opinions expressed herein are theirs alone author and do not necessarily reflect the views of Cointelegraph. Every investment and business involves risk. You should do your own research when making a decision.