The past few months have been painful for the Bitcoin bulls (BTC), but not the only ones. The U.S. Federal Reserve’s restrictive economic policies have prompted investors to seek the protection of cash positions and inflation-protected bonds.
Rising inflation and signs of a recession have pushed the S&P 500 down 19% this year. Even gold, once considered a safe haven, is taking a hit, trading 20% below an all-time high.
Rising home mortgage costs have fueled fears of a housing crisis. Since the Fed began raising interest rates in March, borrowing costs have risen and risen, and mortgage rates have hit multi-decade highs.
Despite prevailing bearish sentiment, Bitcoin bulls could still benefit from the $270 million. USD when the options expire this Friday, November 4th.
640 million USD options are about to expire
Based on November 4 expiration options, Bitcoin bears concentrated their bets between $16,000 and $20,000. These levels may look bleak now, but Bitcoin was below $19,500 two weeks ago.
At first glance, 335 million USD open interest dominates among the 305 mln. USD call instruments, but the 0.92 call-to-put ratio doesn’t tell the whole story. For example, the 7.5% increase in the price of BTC since October 21st. eliminated most bearish bets.
A put option gives the buyer the right to sell BTC at a fixed price on November 4th. 8:00 UTC. However, if the market trades above this price, there is no value in owning the derivative contract, so its value becomes zero.
So, if November 4 8:00 a.m. UTC Bitcoin will exceed $20,000 with only 30 million available at expiration.
Bulls will fight for Bitcoin to break above $22,000
Here are the four most likely scenarios for Friday’s options expiration. A mutually beneficial imbalance represents a theoretical profit. That is, depending on the expiration price, the active number of buy (call) and sell (sell) contracts differs:
- Between $19,000 and $20,000: 500 call options and 5,100 put options. The net result is 90 million. USD, which favors marketable instruments (downward).
- Between $20,000 and $21,000: 3,300 call options and 1,500 put options. The net result is favorable for the purchase of instruments (more) by 40 million. USD.
- Between $21,000 and $22,000: 7500 call options and 200 put options. The net result is 155 million more favorable for the bulls.
- Between $22,000 and $23,000: 12,200 call options and 0 put options. The bulls completely dominate, with a profit of 270 million.
This aggregate rating takes into account call options used for bull bets and put options used for neutral or small trades only. However, this oversimplification ignores more complex investment strategies.
Bears need a price below $20,000 to secure victory
Just a 3% price drop from the current $20,500 level is enough to give Bitcoin bears $90 million. USD profit after the end of November 4. However, these operators experienced a liquidation 780 million
For now, Bitcoin bears must take advantage of short-term headwinds from tightening macroeconomic conditions to secure victory.
Hence, the options market data is slightly favorable for calls, although the 270 mln. USD gains seem distant for BTC bulls.
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