Bitcoin (BTC) has been trying to break out of declining trends over the past week and the first attempt on June 16 failed to break the $ 22,600 resistance. Another $ 21,400 attempt on June 21 was followed by an 8% price correction. After two unsuccessful violations, the price is now below $ 20,000 and raises questions about whether $ 17,600 was actually the bottom.
The longer it takes BTC to break from this bearish pattern, the stronger the resistance line and traders will follow developments closely. That’s exactly why it’s important for bulls to show strength while this week’s $ 2.25 billion monthly options expire.
Uncertainty about the regulatory framework continues to weigh on cryptocurrencies after Christine Lagarde, president of the European Central Bank, expressed her conviction about the need for tighter controls. On June 20, Lagarde expressed his views on the industry’s mortgage and lending activities: “[…] lack of regulation often includes fraud, completely illegal valuation allegations and very often speculation as well as criminal transactions. “
Bitcoin miners forced to liquidate their BTC assets add more negative pressure to BTC prices and data from Arcane Research show that officially listed Bitcoin mining companies sold 100% of their BTC production in May compared to the usual 20% to 40% in previous months. In total, the miners hold 800,000 BTC, which raises concerns about a possible sale. The Bitcoin price correction reduced the profitability of miners because production costs have sometimes exceeded their margins.
The options on June 24 will be particularly daunting for investors because Bitcoin bears are likely to profit by $ 620 million by suppressing BTC below $ 20,000.
The Bulls placed their bets at $ 40,000 and above
The open interest rate for the June 24 option expires at $ 2.25 billion, but the actual figure will be much lower as the bulls were too optimistic. These traders completely missed the mark after the BTC went below $ 28,000 on June 12, but their bullish bets for monthly options expire at $ 60,000.
The 1.70 call-to-sell ratio outperforms $ 1.41 billion in open interest (buy) versus $ 830 million in put (sell) rights. Nevertheless, with Bitcoin below $ 20,000, most bullish bets are likely to be worthless.
If the Bitcoin price stays below $ 21,000 at 8:00 UTC on June 24, only 2% of these options will be available. This difference occurs because the right to buy Bitcoin at $ 21,000 is worthless if BTC trades below that level when it expires.
The bears have the bulls at the corners
Below are three most likely situations based on current pricing action. The number of Bitcoin options available on June 24 for call (bull) and bear (instrument) trading varies, depending on the expiration price. The imbalance in favor of each party forms a theoretical gain:
- Between $ 18,000 and $ 20,000: 500 calls against 33,100 sets. Net income supports the sale of bear instruments of $ 620 million.
- Between $ 20,000 and $ 22,000: 2,800 calls against 27.00 sets. The net profit of the bears is about 520 million dollars.
- Between $ 22,000 and $ 24,000: 5,900 calls against 26,600 sets. Net income supports bear sales of approximately $ 480 million.
This rough estimate takes into account put options used in bearish betting and call options only in neutral to bullish trades. Nevertheless, this oversimplification avoids more complex investment methods.
For example, a trader may have sold a put option and actually received a positive risk for Bitcoin above a certain price, but unfortunately there is no easy way to assess this effect.
Some additional reductions below $ 20,000 would not come as a surprise
Bitcoin bears need to push the price down below $ 20,000 on June 24 to secure a $ 620 million profit. On the other hand, the best example for the bulls requires a pump over $ 22,000 to reduce the impact by $ 140 million.
Bitcoin bulls had $ 500 million in indebtedness that ended on June 12 and 13, so they should have lower margins than needed to raise prices. Based on this data, bears are more likely to fix BTC below $ 22,000 before the June 24 expiration date.
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.
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