Bitcoin bulls trend toward $25K price as $510M options expire on Friday

Bitcoin bulls trend toward $25K price as $510M options expire on Friday – Mail Bonus


Fifty-one days have passed since Bitcoin (BTC) last closed above $24,000, causing even a bullish trader to question whether a sustainable recovery is feasible. However, despite lackluster price action, bulls have the upper hand as Friday’s $510 million BTC options expire.

Bitcoin Index/USD 1 Day Price. Source: TradingView

Investors have been reducing their risk exposure as the Federal Reserve raises interest rates and unwinds its $8.9 trillion balance sheet. As a result, the Bloomberg Commodity Index (BCOM), which measures price changes in crude oil, natural gas, gold, corn and lean hogs, has fallen 9% over the same period.

Traders continue to seek protection through US Treasuries and cash positions as San Francisco Federal Reserve Bank President Mary Daly said on August 2 that the central bank’s fight against inflation is “far from over”. That said, the larger monetary impact on inflation, employment levels and the global economy remains unclear.

Bearish bets are mostly below $22,000

Bitcoin’s recovery above $22,000 on July 27 surprised the bears because only 28% of the put (put) options for August 5 have been placed above such a price level. Meanwhile, Bitcoin bulls may have been fooled by the $24,500 pump on July 30, as 59% of their bets were above $25,000.

Bitcoin options collect open interest for August 5th. Source: CoinGlass

A broader view using the 1.60 call-to-put ratio shows more bets because open call (buy) interest stands at $315 million versus $195 million put (sell) options. Nevertheless, with Bitcoin currently sitting above $23,000, most bearish bets will likely be worthless.

For example, if the price of Bitcoin remains above $23,000 at 8:00 UTC on August 5th, only $19 million worth of these put (sell) options will be available. This difference occurs because there is no use in the right to sell Bitcoin at $22,000 or $20,000 if it trades above that level at expiration.


The Bulls could pocket a $200 million profit

Below are the four most likely scenarios based on current price action. The number of options contracts available on August 5 for buying (bull) and selling (bear) instruments varies, depending on the expiration price. The imbalance, which is in favor of each side, constitutes a theoretical profit:

  • Between $20,000 and $22,000: 100 bucks against 3,700 sets. Net income is around $75 million.
  • Between $22,000 and $24,000: 1,400 bucks against 1,600 sets. The net result is equalized between call (buy) and sell (sell) instruments.
  • Between $24,000 and $25,000: 3,800 call for 100 sets. The net result supports bulls to $90 million.
  • Between $25,000 and $26,000: 0 calls against 7,900 puts. The Bulls increase their profits to $200 million.

This rough estimate takes into account the call options used in bullish bets and the put options only in neutral to bearish trades. Even so, this oversimplification overlooks more complex investment strategies.

Connected: Inflation Punishes Reason While Bitcoin Gives Hope – Jordan Peterson

Bears have less margin needed to suppress Bitcoin prices

Bitcoin bulls need to push the price above $24,000 on August 5 to secure a $90 million profit. On the other hand, pressure below $22,000 is required for their profit to be $75 million.

However, Bitcoin bears had a leveraged short position of $140 million that was closed on the 26th-27th. July, according to information from Coinglass. As a result, they have less room to push prices lower in the short term.

The most likely scenario is a draw, which puts the Bitcoin price between $22,000 and $24,000 before the August 5 options expire.

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