Category: calls

Bitcoin bulls target prices above $58K ahead of Friday’s $820M options expiry

Bitcoin bulls target prices above $58K ahead of Friday’s $820M options expiry

Everyone is talking about a six-figure Bitcoin (BTC) price now that the digital asset has broken out of its multi-month downtrend and confirmed that a bullish trend is in play. If Bitcoin happens to enter a parabolic move toward $110,000, that would finally match PlanB’s Stock-to-Flow model prediction. According to the pseudonymous analyst, the scarcity and valuation of gold and other precious metals and “Elon Musk’s energy FUD and China’s mining crackdown” are a few of the factors responsible for the past five months of 50% or higher inaccuracy in the model.Bulls’ hopes mostly cling to an exchange-traded fund being approved by the United States Securities and Exchange Commission. Currently, there are multiple requests pending review between Oct. 18 and Nov. 1, but the regulator could postpone its final decision.Oct. 15’s $830 million options expiry was largely impacted by the 20% price rally initiated on Oct. 4, which most likely eliminated 92% of the put (sell) options.Bitcoin price on Coinbase in USD. Source: TradingViewThe aftermath of China’s mining crackdown was an important event that might have fueled investor sentiment, and research shows the U.S. accounting for 35.4% of the Bitcoin hash rate. Furthermore, as Cointelegraph reported, the U.S. states of Texas and Ohio are also expected to receive additional large-scale Bitcoin mining centers, which will effectively boost the U.S. crypto market share even higher.The Oct. 8 expiry was profitable for bullsFollowing last week’s $370 million estimated net profit from the BTC options expiry, bulls had more firepower, and this is evident in this Friday’s $820 million expiry. This advantage explains why the call (buy) options open interest is 43% larger than the neutral-to-bearish put options.Bitcoin options aggregate open interest for Oct. 15. Source: BybtAs the above data shows, bears placed $335 million in bets for Friday’s expiry, but it appears that they were caught by surprise, as 92% of the put (sell) options are likely to become worthless.In other words, if Bitcoin remains above $56,000 on Oct. 15, only $36 million worth of neutral-to-bearish put options will be activated on Friday’s 8:00 am UTC expiry.Bulls have a reason to push BTC price above $58,000Below are the four likeliest scenarios for Oct. 15’s expiry. The imbalance favoring either side represents the theoretical profit. In other words, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:Between $52,000 and $54,000: 3,140 calls vs. 2,110 puts. The net result is $55 million favoring the call (bull) instruments.Between $54,000 and $56,000: 3,700 calls vs. 1,240 puts. The net result is $130 million favoring the call (bull) instruments.Between $56,000 and $58,000: 4,850 calls vs. 680 puts. The net result is $235 million favoring the call (bull) instruments.Above $58,000: 6,230 calls vs. 190 puts. The net result is complete dominance, with bulls profiting $350 million.This raw estimate considers call options being exclusively used in bullish bets and put options in neutral-to-bearish trades. However, investors might have used a more complex strategy that typically involves different expiry dates.Bears need a 7% price correction to reduce their lossIn every scenario, bulls have absolute control of this Friday’s expiry, and there are a handful of reasons for them to keep the price above $56,000. On the other hand, bears need a 7% negative move below $54,000 to avoid a loss of $235 million or higher.Nevertheless, traders must consider that during bull runs, the amount of effort a seller needs to pressure the price is immense and usually ineffective. Analytics point to a considerable advantage from call (buy) options, fueling even more bullish bets next week.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Here’s why Bitcoin bulls might trample $50K ahead of Friday’s $2B BTC options expiry

Here’s why Bitcoin bulls might trample $50K ahead of Friday’s $2B BTC options expiry

$2 billion worth of Bitcoin (BTC) options will expire on Friday, Aug. 27. Some analysts argue that a strong call (buy) option buying activity on Aug. 22 was likely the catalyst for the recent $50,000 price test.Digital asset trading firm QCP Capital mentioned in its market update that an entity has been “consistently pushing (option) prices higher in the last few weeks.” The activity, which took place during the morning trading session in Asia, aggressively bought bullish options in chunks of 100 BTC contracts each.The report also mentions the exhaustion of regulatory concerns in the near term, as crypto-related decisions from the Senate Banking Committee and regulators are unlikely to bear fruits in 2021.Bears might be analyzing different dataHowever, the most recent “The Week On Chain” report from blockchain analytics provider Glassnode included some concerning data from Bitcoin on-chain activity. Such analysis found that the amount of entity-adjusted transactions has not responded to the ongoing bullish action.Moreover, Decentrader, a crypto market-intelligence provider, highlighted insufficient trading volume during this recent move to push BTC’s price above $52,000. Bitcoin options aggregate open interest for Aug. 27. Source: Bybt.comFriday will be an important test of the $50,000 level, as 4,372 BTC option contracts await the $218 million decision.The initial call-to-put analysis shows the vast dominance of the neutral-to-bullish call instruments, with 60% larger open interest. Nevertheless, bulls might have been too optimistic, as 68% of their bets have been placed at $50,000 or higher.Related: Bitcoin rejects $51K after Michael Saylor reveals new BTC purchase — What’s next?91% of the put options will probably be worthless at expiryOn the other hand, 91% of the protective put options have been placed at $46,000 or below. Those neutral-to-bearish instruments will become worthless if Bitcoin trades above that price on Friday. The options expiry happens at 8:00 am UTC, so some additional volatility is expected ahead of the event.Below are the four most likely scenarios, considering the current price levels. The imbalance favoring either side represents the potential profit from the expiry considering calls (buy) options are more frequently used in bullish strategies, whereas protective puts are used in neutral-to-bearish trades.Below $45,000: 4,040 calls vs. 2,500 puts. The net result is a $69 million advantage for the neutral-to-bullish instruments.Above $46,000: 6,500 calls vs. 1,300 puts. The net result is $239 million favoring the neutral-to-bullish instruments.Above $48,000: 7,400 calls vs. 420 puts. The net result is a $335 million advantage for neutral-to-bullish instruments.Above $50,000: 12,000 calls vs. 35 puts. The net result is a $600 million advantage for neutral-to-bullish instruments.The above data shows how many contracts will be available on Friday, depending on the expiry price. There’s no way to measure the net result for every market participant as some investors could be trading more complex strategies, including market-neutral ones using both calls and protective puts.Those two competing forces will show their strength as bears will try to minimize the damage. Either way, bulls have complete control of Friday’s expiry, and there seem to be enough incentives for them to defend the $48,000 level and even try a more significant gain by pushing the price above $50,000.Meanwhile, bears should concentrate on the September expiry, although keeping in mind that El Salvador is expected to introduce Bitcoin as legal tender next month. In addition, the country is building the infrastructure to support a state-issued Bitcoin wallet called Chivo.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Back to top