Bitcoin slips towards $ 30K, but data shows bears in favor of $ 1.8B BTC options expiring on Friday

Bitcoin slips towards $ 30K, but data shows bears in favor of $ 1.8B BTC options expiring on Friday – Mail Bonus

Bitcoin (BTC) prices have not been able to close above $ 32,000 in the last fifteen days and have now fallen by 37% so far this year. While it may seem disproportionate, it does not stand out among some of the largest U.S. technology companies that have also suffered significant losses recently.

During the same 15-day period, shares of Shopify Inc. fell. (SHOP) by 76%, Snap Inc. (SNAP) was down 73%, Netflix (NFLX) was down 70% and Cloudflare (NET) was down 62%.

Investors in cryptocurrencies should be less worried about the current “bear market” compared to 79% annual fluctuations in Bitcoin. However, this is clearly not the case, as the “Fear and Greed Index” Bitcoin reached 8 out of 100 on May 17, the lowest level since March 2020.

Traders fear that deteriorating macroeconomic conditions could lead investors to seek refuge in the US dollar and the Treasury. Japan’s industrial production data released on May 18 showed a 1.7% year-on-year decline. In addition, retail sales data from the UK on 20 May showed a 4.9% contraction compared to 2021.

Financial analysts around the world blame weak market conditions for the US Federal Reserve’s slow response to the inflation spike. Thus, traders are increasingly seeking refuge outside of riskier assets, which has a negative effect on Bitcoin prices.

The Bulls placed most bets over $ 40,000

The open interest rate for the monthly May 27 options in Bitcoin is $ 1.81 billion, but the actual figure will be lower as bulls came as a surprise as BTC prices have fallen by 26% in the last 30 days.

Bitcoin options gather open interest rates before May 27. Source: CoinGlass

The ratio of 1.31 reflects $ 1.03 billion open interest (buy) against $ 785 million options. Nevertheless, 94% of the bets are likely to be worthless as Bitcoin now trades close to $ 30,000.

If the price of Bitcoin remains below $ 31,000 on May 27, bulls will only have $ 60 million worth of these calls (purchases) available. This difference occurs because there is no benefit to the right to buy Bitcoin at $ 31,000 if it trades below that level when it expires.

Connected: Low Inflation or Breasts: Analysts say Fed has no choice but to continue raising policy rates

The Bears can secure a $ 390 million profit on May 27th

Below are three most likely situations based on current pricing action. The number of option contracts available on May 27 for the purchase (purchase) and sale (sale) of instruments varies, depending on the depreciation price. The imbalance in favor of each party forms a theoretical gain:

  • Between $ 28,000 and $ 30,000: 800 call (buy) against 14,200 sets (sell). The net profit of the bears is about 390 million dollars.
  • Between $ 30,000 and $ 32,000: 2,050 calls (buy) against 11,200 sets (sell). The Bears have a $ 250 million lead.
  • Between $ 32,000 and $ 33,000: 5,650 calls (buy) against 9,150 sets (sell). The net profit of the bears is about 110 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.

For example, a trader may have sold a stock option and actually received a negative risk for Bitcoin above a certain price, but unfortunately there is no easy way to assess this effect.

Bitcoin bears need to keep prices below $ 30,000 on May 27 to profit from $ 390 million of expiring monthly options. On the other hand, bulls can reduce their losses by pushing BTC above $ 32,000, an 8% increase from the current $ 29,700 price. However, given the bearish macroeconomic situation, the bears appear to be in a better position to expire on 27 May.

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.