Category: Deribit

BTC Futures Open Interest Soars Leading up to Bitcoin ETF’s Official Launch

BTC Futures Open Interest Soars Leading up to Bitcoin ETF’s Official Launch

Prior to the launch of the Proshares Bitcoin Strategy ETF (BITO), open interest in bitcoin futures products has been surging since the start of the month, according to data from the Coinbase Institutional arm Skew Analytics. Binance and FTX command the lion’s share of bitcoin futures’ open interest with 40.67% of the market. Moreover, data from bybt.com’s bitcoin futures’ open interest metrics, shows the Chicago Mercantile Exchange (CME) commands 15.54% of all the open interest in bitcoin tallied this week.
Bitcoin Futures Open Interest Has Risen Significantly
On Tuesday, October 19, 2021, the first exchange-traded fund based on bitcoin futures was launched in the United States. So far, Proshares Bitcoin Strategy ETF (BITO) is trading above the ETF’s initial value when the opening bell kick-started trading.
Proshares Bitcoin Strategy ETF (BITO) on its first day of trading at 12:00 p.m. (EST) on October 19, 2021.
Since the first bitcoin ETF is based on BTC derivatives markets, prior to the launch a large influx of bitcoin futures open interest was recorded by a number of analytical web portals.
On October 12, Coinbase Institutional’s Skew Analytics tweeted about the massive open interest stemming from bitcoin futures markets. “Bitcoin futures open interest have been surging since the start of the month,” the official Coinbase Institutional Skew Twitter account said.
Chart shared by the official Coinbase Institutional Skew Twitter account.
Additionally, the account noted that BTC options markets were quite different. “Bitcoin options market seems cautiously positioned ahead of ETF catalysts with skew rallying back to positive territory,” Skew remarked the following day.

Binance, FTX Command 40.67% of Bitcoin Open Interest – CME Group Captures Close to 16%
Data from bybt.com indicates that Binance rules the roost as far as bitcoin futures open interest dominance is concerned. Statistics indicate that Binance commands 23.5% of all the bitcoin open interest among all the BTC derivatives markets trading today.
Total open interest (OI) on October 19, 2021, is 374.98 BTC or $23.57 billion. Data via bybt.com.
Binance has around $5.54 billion recorded, while FTX Exchange captures around $4.05 billion or 17.17%. Open interest (OI) metrics from CME Group have increased as CME now holds the third-largest position in terms of OI. CME has seen a 1.35% increase in OI and metrics show CME commands 15.54% of all the bitcoin futures’ open interest.
CME is followed by bitcoin futures markets such as Bybit, Okex, Deribit, Huobi, and Bitmex. Collectively all five of the mentioned crypto derivatives exchanges command 35.56% of all the bitcoin OI tallied.
What do you think about bitcoin futures’ open interest surging before the bitcoin ETF listed today? Let us know what you think about this subject in the comments section below.

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Traders celebrate Bitcoin's impending ETF, but options markets are less certain

Traders celebrate Bitcoin's impending ETF, but options markets are less certain

The United States Securities and Exchange Commission, or SEC, is expected to rule on Oct. 18 whether to approve an application from asset manager ProShare Capital Management for a Bitcoin exchange-traded fund (ETF). As previously reported by Cointelegraph, SEC Chairman Gary Gensler recently suggested that the regulator is more inclined to approve indirect-exposure Bitcoin futures ETFs under the Investment Company Act of 1940.On Oct.15, the Nasdaq Stock Market certified the registration of Valkyrie’s Bitcoin Strategy ETF shares for listing. The deadline for the SEC to officially approve Valkyrie’s ETF application is Oct. 25, but this could be extended to Dec. 8.$70,000 call options see their implied probability hit 25%Two weeks ago, it would have been a daunting task to find an investor willing to bet on a $70,000 Bitcoin (BTC) price for Oct. 29. A 62% upside was needed from the $43,100 price on Sep. 30, and this seemed far-fetched at that time. Therefore, the Oct. $70,000 BTC call (buy) options traded on Sep. 30 at Deribit for $194, or 0.0045 BTC.Bitcoin Oct. 29 call options price in BTC. Source: DeribitAs shown above, the same option is currently trading at $1,570, or 0.0262 BTC, as Bitcoin rallied by 39% month-to-date to $60,000. So, even though this is still a long way to go for the $70,000 call option, the odds have significantly increased.Even with the BTC price increase, the implied options probability (delta) currently sits at 25%, which might sound bearish at first sight. Traders should not take options probabilities literallyOptions pricing is heavily dependent on how distant the expiry date is. Considering Bitcoin’s 4% daily volatility, anything can happen ahead of the Oct. 29 options expiry. Therefore, traders should not fixate too much on options implied probability (delta).To better assess the odds of Bitcoin’s ETF approval by the end of the month, one should use the $50,000 delta as the ‘base’ scenario. Traders should assume that a 17% price drop would definitively signal that the decision by the U.S. SEC was either delayed or rejected. Considering that the $50,000 call option is trading at an 84% delta, or implied probability, investors are pricing a 16% odds for a doomsday scenario.Meanwhile, the $70,000 call option for Oct. 29 at 8:00 am UTC, which indicates that the ETF has been approved, presents a 25% implied probability. Options markets undoubtedly show higher odds for a positive move, but far from a certainty.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.

Ethereum price hits $3,800, boosting bulls' control in Friday's ETH options expiry

Ethereum price hits $3,800, boosting bulls' control in Friday's ETH options expiry

Ether (ETH) entered a slightly bullish channel earlier this month, and currently the price is marching toward the $3,800 level. Despite the recent turbulence, Ether bulls are set to bag a $53 million profit on this Friday’s weekly options expiry. Investors also appear to be disinterested in Ether’s recent underperformance versus Bitcoin (BTC), and to date, the altcoin’s gains stand at 265%. If Ether manages to stay above $3,600 on Friday, 99% of the $180 million put (sell) options will become worthless.Ether price at Bitstamp in USD. Source: TradingViewEthereum smart contract competitors continue to pressure the leading network and at the time of writing, Ethereum’s average gas fees remain above $20. Polkadot (DOT) is scheduled to begin its sidechain auctions on Nov. 11, and this will support new token launches, decentralized finance (DeFi) applications, Internet of Things (IoT) solutions, all going through trustless cross-network bridges.This week, Binance Smart Chain revealed plans to launch a $1 billion fund to accelerate adoption across the entire crypto industry. Investors usually interpret potential incubation events backed by blockchain projects as bullish for their native assets and BNB price gained at least 30% since the announcement. Bears were not expecting prices above $3,300Based on recent mildly negative newsflow, it is possible to understand why bears placed 88% of their bets at $3,300 or lower. Had bulls been a little less greedy, they could have dominated Friday’s $365 million expiry.The Oct. 15 expiry is perfectly balanced between call (buy) and put (sell) options according to the long-to-short ratio. Still, this birdseye view needs further detail, depending on the expiry price.Ether Oct. 15 futures aggregate open interest. Source: BybtAt first sight, both sides hold some $180 million worth of Ether options, as indicated by the 1.03 call-to-put ratio.However, this metric is deceptive because the recent Ether rally will likely wipe out most of their bearish bets. For example, if Ether’s price remains above $3,500 at 8:00 am UTC on Friday, only $6.6 million of the put (sell) options will be available.Bulls are comfortable at $3,600Any expiry price above $3,500 is a bear trap, although a $32 million advantage should not be enough to cause damage. To put things in perspective, Ether’s monthly options expiry holds over $800 million open interest.Below are the four likeliest scenarios considering the current price levels, as the imbalance favoring either side represents the potential theoretical profit from the expiry.The data shows how many contracts will be available on Oct. 15 for both bulls (call) and bear (put) instruments.Between $3,300 and $3,500: 7,450 calls vs. 3,550 puts. The net result favors bulls by $13 million;Between $3,500 and $3,600: 11,150 calls vs. 1,900 puts. The net result favors bulls by $32 million;Between $3,600 and $3,800: 15,400 calls vs. 600 puts. Bulls profit increases to $74 million.Above $3,800: 27,450 calls vs. 0 puts. Bulls dominate by profiting $104 million.This crude estimate considers call (buy) options used in bullish strategies and put (sell) options exclusively in neutral-to-bearish trades. However, a trader could have sold a put option, effectively gaining a positive exposure to Ether above a specific price. But, unfortunately, there’s no easy way to estimate this effect.Bears need sub-$3,500 to balance the scalesBulls’ profit increases to $104 million with Ethereum trading above $3,800, thus a $30 million increase from the current $74 million estimated gain. On the other hand, there’s a $61 million gain from the bear’s perspective by pressuring the price below $3,500, as the above estimate shows. With little over a day before the Oct. 15 expiry, the bears will have a hard time suppressing the current bull run. Regardless of the competition Ethereum network faces and the high gas fees, investors’ demand for decentralized finance (DeFi) and NFTs seem to be enough to keep Ether in an uptrend.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.

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.

Traders pin Ethereum’s route to new ATH to eventual Bitcoin ETF approval

Traders pin Ethereum’s route to new ATH to eventual Bitcoin ETF approval

Ether (ETH) price is lagging Bitcoin’s (BTC) price action by 13% in October, but is this relevant? To date, the altcoin has still outperformed BTC by 274% in 2021. However, traders tend to be short-sighted and some will question whether the Ethereum network can successfully migrate to proof of stake (PoS) validation and finally solve the high gas fees issue.Bitcoin and Ether prices at Bitstamp. Source: TradingViewMoreover, the increasing competition from smart contract networks like Solana (SOL) and Avalanche (AVAX) have been worrying investors:One big problem with the “ETH is ultra sound money” meme is that EIP-1559 only limits the supply of ETH if Ethereum continues to have lots of transactions. It’s just as possible that people will tire of $80 gas fees and opt for one of numerous alternatives (SOL, AVAX, etc).— dennis in SF // OP_CTV (@pourteaux) October 8, 2021According to Cointelegraph, the recent speculation over the possible approval of a Bitcoin exchange-traded fund (ETF) raised traders’ appetite for BTC. The U.S. Securities and Exchange Commission (SEC) is expected to announce its decision on multiple ETF requests over the next couple of weeks. However, it remains a possibility that the regulator will postpone these dates.Pro traders are unfazed by the recent price stagnationTo determine whether professional traders are leaning bearish, one should start by analyzing the futures premium — also known as the basis rate. This indicator measures the price gap between futures contract prices and the regular spot market.Ether’s quarterly futures are the preferred instruments of whales and arbitrage desks. These derivatives might seem complicated for retail traders due to their settlement date and price difference from spot markets, but their most significant advantage is the lack of a fluctuating funding rate.Ether three-month futures basis rate. Source: Laevitas.chThe three-month futures typically trade with a 5% to 15% annualized premium follows the stablecoin lending rate. By postponing settlement, sellers demand a higher price, and this causes the price difference.As depicted above, Ether’s failure to break the $3,600 resistance has not caused a shift in pro traders’ sentiment because the basis rate remains at a healthy 13%. This shows that there is no excessive optimism at the moment.Retail traders have been neutral for the past five weeksRetail traders tend to opt for perpetual contracts (inverse swaps), where a fee is charged every eight hours to balance the leverage demand. To understand if some panic selling occurred, one must analyze the futures markets funding rate.Ether perpetual futures 8-hour funding rate. Source: BybtIn neutral markets, the funding rate tends to vary from 0% to 0.03% on the positive side. This fee is equivalent to 0.6% per week and indicates that longs are the ones paying it.Since Sept. 7, there hasn’t really been any indication of high leverage demand from either bulls or bears. This balanced situation reflects retail traders’ lack of appetite for leverage long positions, but at the same time shows little panic selling or excessive fear.Derivatives markets show that Ether investors are not worried about the recent underperformance versus Bitcoin. Furthermore, the lack of excessive long leverage after a 274% gain year-to-date should be positively portrayed.By leaving some room for bullishness without compromising the derivatives market structure, Ether traders seem prepared for a rally above its all-time high, especially if a Bitcoin ETF is approved.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.

Bitcoin price is correcting, but what does futures data show?

Bitcoin price is correcting, but what does futures data show?

Bitcoin had been underperforming most altcoins for the past two months, but that trend reversed this week when (BTC’s) 20% rally pushed its market capitalization to break the $1 trillion mark on Oct. 6. That shifted investors’ attention back to the leading cryptocurrency, and altcoins are currently in the red for the day. The current positive momentum could be dangerous if Bitcoin traders become overconfident and abuse leverage to open long positions. To avoid this, traders need to carefully analyze derivatives markets to exclude this risk.Top 14 coins weekly performance. Source: CoinMarketCapNotice above how the altcoin market capitalization increased by 5.8% while Bitcoin posted a 20.8% gain in the same period. Sure enough, there were some outliers like Shiba Inu (SHIB) which rose by 200%, Fantom (FTM), which rallied 60%, and Klaytn (KLAY), which gained 36%. However, the aggregate market capitalization from altcoins did not accompany Bitcoin’s performance.Some well-known personalities, such as billionaire Wall Street investor Bill Miller recently expressed their optimism for Bitcoin while raising concerns on most altcoin projects. Miller explicitly mentioned the “big banks” getting involved and referred to “huge amounts” of venture capital money flowing into Bitcoin.The recent Bitcoin frenzy seems driven by the macro-economic scenario. The United States increased its debt limit by $480 billion to pay off its obligations until early December. The inflationary pressure brought by unending stimulus packages and meager interest rates has been fueling the long rally in commodities. For example, oil reached its highest level in seven years, and wheat futures recently hit a record high not seen since February 2013. Even the S&P Case-Shiller home price index has presented an annualized 23.3% gain.To understand if Bitcoin traders got overly excited, traders should analyze Bitcoin’s derivatives indicators like the futures markets premium and options skew.The futures premium shows traders are slightly bullishThe basis rate measures the difference between longer-term futures contracts and the current spot market levels. This indicator is also frequently referred to as the futures premium.Bitcoin 3-month futures annualized basis. Source: Laevitas.chA 5% to 15% annualized premium is expected in healthy markets, which is a situation known as contango. This price difference is caused by sellers demanding more money to withhold settlement longer.The recent 20% Bitcoin price rally caused the indicator to reach the upper limit of this neutral zone, meaning investors are bullish but not yet overconfident. Whenever buyers demand excessive leverage, the basis rate can easily surpass 25%, as seen in mid-May.To exclude externalities specific to the futures instrument, one should also analyze options markets.Bitcoin options signal “neutral” sentiment The 25% delta skew compares similar call (buy) and put (sell) options. This metric will turn positive whenever “fear” is prevalent because traders expect potential downside.The opposite holds when option traders are bullish, causing the 25% delta skew indicator to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.Deribit BTC options 25% delta skew. Source: LaevitasThe above chart shows that there hasn’t been a single instance of options traders becoming overconfident in the past six months, which would signal “greed” because the 25% delta skew dropped below negative 8%. Meanwhile, the indicator has ranged near 0 for the past week, showing balanced risks between the bears and bulls.Those findings necessarily show a lack of confidence from buyers, but it is quite the opposite. Had Bitcoin bulls already been overly confident at $57,000, there would be little room for additional leverage, increasing the risk of a cascading liquidation if a momentary price correction occurred.Bulls are modestly confident and even a 20% price correction is unlikely to change the situation because the futures market’s basis rate shows a reasonable premium after the recent rally.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.

Ethereum price options: All $250M in bearish bets for Friday are underwater

Ethereum price options: All $250M in bearish bets for Friday are underwater

Ether (ETH) has been facing a bearish regression channel since Sept. 1, although it is currently battling to break its resistance.But despite some headwinds, ETH bulls will likely profit $115 million on Friday’s weekly Ether options expiry. The 21% pump over the past week was just enough to make the entire $250 million worth of neutral-to-bearish put options worthless.Ether price in USD at Coinbase. Source: TradingViewRegulatory fear limits the upsideUnderstandably, negative headlines about increasing regulatory scrutiny toward crypto may have subdued prices last month, particularly as China outright banned all cryptocurrency activity in the country. Major crypto exchanges, including Binance and Huobi, halted most of their services in mainland China, and a couple of the largest Ethereum mining pools were forced to shut down completely.The negative press followed. Founder of Citadel Securities, one of the world’s biggest market-making firms, said the company does not trade cryptocurrencies due to the sector’s regulatory uncertainties. The Russian State Duma Committee on Financial Markets chairman is also talking about ramping up regulations to protect retail investors; and so on.Based on the negative newsflow, it is possible to understand why bears placed 86% of their bets at $3,200 or lower. However, the past weeks definitively caused those put (sell) options to lose value quickly.The Oct. 8 expiry will be a strength test for bears because any price above $3,500 means a bloodbath with the absolute dominance of call (buy) options.Ether options aggregate open interest for Oct. 8. Source: BybtAt first sight, the $250-million neutral-to-bearish instruments dominated the weekly expiry by 16% compared to the $210-million call (buy) options.However, the call-to-put ratio is deceiving because the recent ETH rally will likely wipe out most of their bearish bets if Ether’s price remains above $3,500 at 8:00 am UTC on Friday. There is no value on a right to acquire ETH at $4,000 if it’s trading below that price.Bears should throw the towel and take the $115 million lossNotably, 94% of the put options, where the buyer holds a right to sell Ether at a pre-established price, were placed at $3,500 or lower. These neutral-to-bearish instruments will become worthless if ETH trades above that price on Friday morning.Below are the four likeliest scenarios considering the current price levels, as the imbalance favoring either side represents the potential profit from the expiry.The data shows how many contracts will be available on Friday, depending on the expiry price.Between $3,100 and $3,300: 14,300 calls vs. 9,800 puts. The net result is somewhat balanced between bulls and bears;Between $3,300 and $3,500: 21,650 calls vs. 1,900 puts. The net result favors bulls by $66 million;Between $3,500 and $3,700: 32,050 calls vs. 0 puts. The net result favors bulls by $115 million;Between $3,700 and $3,900: 43,300 calls vs. 0 puts. Bulls profit increases to $165 million.This crude estimate considers call (buy) options used in bullish strategies and put (sell) options exclusively in neutral-to-bearish trades. However, this oversimplification disregards more complex investment strategies.Related: Bitcoin bears risk getting trapped if BTC price remains above $50K — Here’s whyFor example, a trader could have sold a put option, effectively gaining a positive exposure to Ether above a specific price. But, unfortunately, there’s no easy way to estimate this effect.There’s a $47 million gain from the bear’s perspective by pressuring below $3,500, as the above estimate shows. On the other hand, bulls could increase their advantage by $49 million by taking Friday’s options expiry price above $3,800.As things currently stand, bulls have absolute control going into the Oct. 8 expiry, and the incentives for both sides to try pushing the price $200 above or below seem balanced. Therefore, bears should throw the towel and regroup for next week’s expiry. 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.

Bitcoin bears risk getting trapped if BTC price remains above $50K — Here’s why

Bitcoin bears risk getting trapped if BTC price remains above $50K — Here’s why

Bitcoin’s (BTC) 32% weekly rally became bears’ worst nightmare as Friday’s $860million options expiry is approaching. After breaking the $54,000 level, over 99% of the bearish bets using put (sell) options are likely to become worthless.Bears are in a dangerous position, particularly as Bloomberg’s Crypto Outlook pointed out that Bitcoin’s $50,000 resistance was about to flip support. Senior commodity strategist Mike McGlone cited such factors as increasing adoption along with a diminishing supply on exchanges.Bloomberg also noted that traditional finance investors’ concerns surged after the protection against the possibility of a United States government default rose to its highest level in six years. Moreover, one-year credit-default swaps, or the cost to insure against a payment delay, have risen to 27 basis points from 4 basis points since mid-September.Bitcoin price at Bitstamp in USD. Source: TradingViewAnother crucial metric that certainly fueled this week’s bull run was Bitcoin’s hash rate, the estimated processing power backing the network miners. The capacity took a big blow in May, as China vetoed coal-based energy use for mining cryptocurrencies. Then, in early June, the country decided to ban cryptocurrency mining for good, which temporarily took many miners offline, impacting the hash rate.Bitcoin 7-day average hash rate in terahashes per second. Source: Blockchain.comThis week, the bulls picked up on these favorable conditions and pushed Bitcoin to its highest level since May 12 at $55,000. As for the $860-million options expiry on Friday, Oct. 8, bears need a miracle to push the price below $50,000 to avoid significant losses.Bitcoin options aggregate open interest for Oct. 8. Source: BybtAs the above data shows, bears placed $400 million in bets for Friday’s expiry, but it appears that they were caught by surprise as 99% of the put (sell) options are likely to become worthless. In other words, if Bitcoin remains above $54,000 on Friday, only $2.7 million worth of neutral-to-bearish put options will be activated on the expiry. A right to sell (put option) Bitcoin at $50,000 becomes worthless if BTC trades above that price at 8:00 am UTC on Friday.Open interest is fairly balanced between bulls and bearsThe 1.16 call-to-put ratio represents the slight difference between the $465 million worth of call (buy) options versus the $400 million in put (sell) options. Although favoring bulls, this broader view needs a more detailed analysis because some bets are implausible considering the current price.Below are the four likeliest scenarios for Friday’s expiry. The imbalance favoring either side represents the theoretical profit. In other words, depending on the expiry price, the quantity of calls (buy) and puts (sell) contracts becoming active varies:Between $48,000 and $50,000: 3,515 calls vs.1,765 puts. The net result is $85 million favoring the call (bull) instruments.Between $50,000 and $54,000: 6,270 calls vs. 735 puts. The net result is $290 million favoring the call (bull) instruments.Between $54,000 and $56,000: 6,930 calls vs. 50 puts. The net result is $370 million favoring the call (bull) instruments.Above $56,000: 7,600 calls vs. 0 puts. The net result is a complete dominance with bulls profiting $425 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 are wrecked one way or anotherTo sum up, the bulls have absolute control of Friday’s expiry and enough incentives to keep the price above $54,000. On the other hand, bears need a 10% negative move below $50,000 to avoid the $370-million loss. However, one must consider that during bull runs, like the one Bitcoin is in right now, the amount of effort a seller needs to put in to liquidate longs is immense and usually ineffective. Put simply, if no surprises come before Oct. 8, Bitcoin should continue its rally to higher prices.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.

Bitcoin price is back at $50K, but exactly how 'bullish' are the bulls?

Bitcoin price is back at $50K, but exactly how 'bullish' are the bulls?

Cryptocurrency markets rallied 12.5% over the past seven days to reach a $2.44 trillion market capitalization. However, that move doesn’t seem to be inspiring confidence because the same level was tested 16 days ago when a 27% retrace followed ether’s (ETH) attempt to break $3,650 over the next six days. Regulation seems to be a key concerning factor for buyers as the U.S. House of Representatives is expected to vote on the $1 trillion infrastructure bill this month. In addition to defining who qualifies as a broker, the legislation would impose anti-money laundering (AML) and know-your-customer (KYC) type requirements on many kinds of cryptocurrency transactions, which could also be detrimental for DeFi protocols.Top eight cryptos 7 and 30-day performances. Source: CoinMarketCapAs shown above, the negative performance seen in the top-10 cryptocurrencies has impacted investor sentiment over the past 30 days. For this reason, it’s important to measure more than just Bitcoin’s nominal price. Traders should also analyze BTC’s derivatives indicators like the futures markets premium and options skew.The futures premium shows traders are slightly bullishThe basis rate is also frequently referred to as the futures premium and it measures the difference between longer-term futures contracts and the current spot market levels.A 5% to 15% annualized premium is expected in healthy markets, which is a situation known as contango. This price difference is caused by sellers demanding more money to withhold settlement longer.Bitcoin 3-month futures annualized basis. Source: Laevitas.chAs depicted above, the current 9% annualized premium is neutral but shows an improvement over the previous couple of weeks. That indicates that traders are cautiously optimistic, leaving room for further long leverage when confidence is fully restored.Options traders exit ‘fear’ modeTo exclude externalities specific to the futures instrument, one should also analyze options markets.The 25% delta skew compares similar call (buy) and put (sell) options. The metric will turn positive when “fear” is prevalent as the protective put options premium is higher than similar risk call options.The opposite holds when market makers are bullish, causing the 25% delta skew indicator to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.Deribit BTC options 25% delta skew. Source: LaevitasNotice how Bitcoin option traders entered the “fear” level on Sept. 25 as the $41,000 support was tested multiple times. Nevertheless, a drastic change took place since Sept. 30, and the indicator now sits at a neutral zone.As the situation currently stands, both the futures’ basis and options 25% skew show a typical “glass half full” scenario. Meaning that even though Bitcoin reached its highest level in 27 days and is above the $50,000 resistance, there’s still room for buyers to strap on additional leverage before metrics flash signs of overextension or euphoria. A $50,000 breakout with the current meager derivatives data would usually be interpreted as a weakness. However, considering that the total crypto capitalization is still in the same place as 30 days ago and the unmitigated regulatory concerns, there is no reason to worry. At the moment, neither the futures markets nor options markets show any signs of bearishness.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.

Risk-averse Ethereum traders use this options strategy to increase exposure to ETH

Risk-averse Ethereum traders use this options strategy to increase exposure to ETH

On Oct. 1, the cryptocurrency market experienced a 9.5% pump that drove Bitcoin (BTC) and Ether (ETH) to their highest levels in 12 days. A variety of reasons have been attributed to the price move, including the U.S. consumer price index, exchanges’ diminishing supply, and a “cup and handle” bullish continuation chart formation.Traders are not likely to find an explanation for the sudden move, apart from investors regaining confidence after the Sept. 19 drop was attributed to contagion fears from China-based property developer Evergrande.The Ethereum network has been facing some criticism due to the $20 or higher transaction costs caused by the nonfungible token (NFT) sales and decentralized finance (DeFi) activity. Cross-chain bridges connecting Ethereum to proof-of-stake (PoS) networks have been partially solving this issue, and Friday’s Umbrella network oracle service launch shows just how fast interoperability is advancing.It is also worth noting that China’s announced even stricter rules last week had a positive impact on the volumes seen at Decentralized exchanges (DEX). Centralized crypto exchanges, including Huobi and Binance, announced service suspension for Chinese residents, and a significant outflow of coins followed this. At the same time, this increased movement on Uniswap and the decentralized derivatives exchange dYdX.Even with all this volatility, there are still reasons for investors’ year-end bullishness on Ether. At the same time, the limitations imposed by Ethereum layer-1 scaling also caused some of its competitors to present significant gains over the past couple of months.ETH price vs. AVAX, SOL, ATOM. Source: TradingViewNotice how Ether’s 58% positive performance in three months has been significantly below those emerging Proof-of-Stake (PoS) solutions offering smart contract capabilities and interoperability.For bullish traders who think Ether price will break to the upside but are unwilling to face the liquidation risks imposed by futures contracts, the “long condor with call options” strategy might yield more optimal results.Let’s take a closer look at the strategy.Options are a safer bet for avoiding liquidationsOptions markets provide more flexibility to develop custom strategies and there are two instruments available. The call option gives the buyer upside price protection, and the protective put option does the opposite. Traders can also sell the derivatives to create unlimited negative exposure, which is similar to a futures contract.Ether options strategy returns. Source: Deribit Position BuilderThis long condor strategy has been set for the Dec. 31 expiry and uses a slightly bullish range. The same basic structure can also be applied for other periods or price ranges, although the contract quantities might need some adjustment.Ether was trading at $3,300 when the pricing took place, but a similar result can be achieved starting from any price level.The first trade requires buying 0.50 contracts of the $3,200 call options to create positive exposure above this price level. Then, to limit gains above $3,840, the trader needs to sell 0.42 ETH call option contracts. To further limit gains above $5,000, another 0.70 call option contracts should be sold.To complete the strategy, the trader needs upside protection above $5,500 by buying 0.64 call option contracts if Ether price skyrockets.The 1.65 to 1 risk-reward ratio is moderately bullishThe strategy might sound complicated to execute, but the margin required is only 0.0314 ETH, which is also the max loss. The potential net profit happens if Ether trades between $3,420 (up 3.6%) and $5,390 (up 63.3%).Traders should remember that it is also possible to close the position ahead of the Dec. 31 expiry if there’s enough liquidity. The max net gain occurs between $3,840 and $5,000 at 0.0513 ETH, which is 65% higher than the potential loss.With over 90 days until the expiry date, this strategy gives the holder peace of mind because there is no liquidation risk like futures trading.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.

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