Category: expiry

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.

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.

Bears intend to pin Bitcoin price below $42K until Friday's $700M expiry passes

Bears intend to pin Bitcoin price below $42K until Friday's $700M expiry passes

Bitcoin (BTC) has been trading in a descending pattern since the strong $53,000 rejection that occurred on Sept. 7, and the $3.4 billion futures contracts liquidation along with China’s ban on crypto trading appear to have severely impacted traders’ morale. Adding to the negative sentiment, major crypto exchanges like Binance and Huobi halted some services in mainland China, and some of the largest Ethereum mining pools, like Sparkpool and BeePool were forced to shut down completely.Bitcoin price in USD at Coinbase. Source: TradingViewBased on the above chart, it is possible to understand why buyers placed 80% of their bets at $44,000 or higher. However, the past two weeks definitively caused those call (buy) options to lose value quickly.On Sept. 25, the People’s Bank of China (PBoC) posted a nationwide ban on crypto and barred companies from providing financial transactions and services to market participants. The news triggered an 8% dip in Bitcoin’s price along with a broader pullback on altcoins.The bearish sentiment was confirmed after Tesla CEO Elon Musk expressed his support for cryptocurrency at the Code Conference in California. Musk said:”It is not possible to, I think, destroy crypto, but it is possible for governments to slow down its advancement.”Had we been in a neutral-to-bullish market, those remarks would likely have reversed the negative trend. For example, on July 21, Elon Musk said that Bitcoin had already hit his benchmark on renewable energy. As a result, Bitcoin price, which had previously dropped 12% in ten days, reverted the move and hiked 35% over the next ten days.The Oct. 1 expiry will be a strength test for bulls because any price below $42,000 means a bloodbath with absolute dominance of put (sell) options.Bitcoin options aggregate open interest for Oct. 1. Source: Bybt.comInitially, the $285 million neutral-to-bullish instruments dominated the weekly expiry by 21% compared to the $320 million puts (sell) options.However, the 1.21 call-to-put ratio is deceiving because the excessive optimism seen from bulls could wipe out most of their bets if Bitcoin price remains below $43,000 at 8:00 am UTC on Friday. After all, what good is a right to acquire Bitcoin at $50,000 if it’s trading below that price?Bears were also caught by surpriseSixty-six percent of the put options, where the buyer holds a right to sell Bitcoin at a pre-established price, has been placed at $42,000 or lower. These neutral-to-bearish instruments will become worthless if Bitcoin trades above that price on Friday morning.Below are the four most likely scenarios that consider the current price levels. 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 $40,000 and $41,000: 110 calls vs. 4,470 puts. The net result is $175 million favoring the protective put (bear) instruments.Between $41,000 and $43,000: 640 calls vs. 4,000 puts. The net result continues to favor bears by $140 million.Between $43,000 and $45,000: 1,780 calls vs. 2,070 puts. The net result is balanced between bears and bulls.Above $45,000: 2,530 calls vs. 1,090 puts. The net result shifts in favor of bulls by $65 million.This crude estimate considers call (buy) options used in bullish strategies and put (sell) options exclusively in neutral-to-bearish trades. Unfortunately, real life is not that simple because it’s possible that more complex investment strategies are being deployed.For example, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin above a specific price. Consequently, there’s no easy way to estimate this effect, so the simple analysis above is a good guess.As things currently stand, bears have absolute control of the Oct. 1 expiry and they have a few good reasons to keep pressuring the price below $43,000. Unless some unexpected buying pressure comes out over the next 12 hours, the amount of capital required for bulls to force the market above the $45,000 threshold seems immense and unjustified.On the other hand, bears need a 5% negative price swing that takes BTC below $41,000 to increase their lead by $35 million. So this move also shows little return for the amount of effort required.The bull’s only hope resides in some surprise positive newsflow for Bitcoin price ahead of Oct. 1 at 8:00 am UTC. If any sensible action is bound to occur, it will likely take place during the weekend, when there’s less active flow.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.

All bark and some bite. China’s Bitcoin ban puts traders in the ‘fear’ zone

All bark and some bite. China’s Bitcoin ban puts traders in the ‘fear’ zone

China bans Bitcoin (BTC), again.No, we’re not traveling back in time. On Sept. 24, the People’s Bank of China (PBoC) published a new set of measures to promote inter-departmental coordination on cracking down on crypto activity. The measures intended to “cut off payment channels, dispose of relevant websites and mobile applications in accordance with the law.”Most investors may have missed the $3 billion BTC and $1.5 billion Ether (ETH) monthly options expiry that took place less than one hour before the crypto ban news came out. According to “Molly”, a former Bitcoin Magazine contributor, the remarks from China were originally posted on Sept. 3.However, if some entity were aiming to profit from the negative price swing, releasing the news ahead of the expiry at 8:00 am UTC on Friday would have made more sense. For example, the $42,000 protective put option became worthless because the Deribit expiry price was $44,873. That option holder had a right to sell Bitcoin at $42,000, but there’s no value in that if BTC expiry happens above that level.For the conspiracy theorists out there, the Chicago Mercantile Exchange (CME) Bitcoin futures expiry is the average price between 2:00 pm and 3:00 pm UTC. Consequently, the potential $340 million open interest settled near the $42,150 level. In the futures markets, buyers (longs) and sellers (shorts) are matched at all times, thus making it virtually impossible to guess which side has larger firepower.Bitcoin price at Bitstamp in USD. Source: TradingViewDespite the $4,000 negative price swing, aggregate liquidations on leveraged long futures contracts were less than $120 million. This data should be highly worrisome for bears because it signals that bulls are not overconfident and that they are not using extreme leverage.Pro traders showed some doubt but remained neutralTo analyze how bullish or bearish professional traders are, one should monitor the futures premium — also known as “basis rate.” The indicator 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 gap is caused by sellers demanding more money to withhold settlement longer, and a red alert emerges whenever this indicator fades or turns negative, known as “backwardation.”Bitcoin 3-month future contracts basis rate. Source: Laevitas.chNotice how the sharp decrease caused by the negative 9% move on Sept. 24 caused the annualized futures premium to reach its lowest level in two months. The current 6% indicator lies at the bottom of the “neutral” range, ending a moderate bullish period that lasted until Sept. 19.To confirm whether this movement was specific to that instrument, one should also analyze options markets.Option markets confirm traders are entering the “fear” zoneThe 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 Bitcoin options 25% delta skew. Source: laevitas.chThe 25% delta skew had been ranging in the neutral zone since July 24, but it spiked to 10% on Sept. 22, signaling “fear” from options traders. After a brief retest of the neutral 8% level, today’s Bitcoin price action has caused the indicator to rise above 11%. Once again, a level last seen two months ago, and very similar to BTC futures markets.Although no bearish signs emerged from the Bitcoin derivatives market, today’s dip below $41,000 marked professional traders flip to “fear” mode. The result of this is that futures contracts traders are reluctant to open leverage long positions, while option markets display a premium for protective put options.Unless Bitcoin shows strength during the weekend, bears might profit from investors’ current panic.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 look to profit from Friday’s $195M BTC options expiry

Bitcoin bulls look to profit from Friday’s $195M BTC options expiry

Over the past ten days, Bitcoin (BTC) price tested the $44,500 resistance on multiple occasions, and this marked a 16% drawdown from the previous week’s $53,000 local top. Not even the $3.4 billion long futures contracts liquidations that occurred on Sept. 7 while BTC dropped by 18.7% was enough to eliminate bulls’ optimism, according to options markets data. Bitcoin price at Coinbase in USD. Source: TradingViewIf historical data plays any role in the price of Bitcoin, the month of September presented negative performances in four of the previous five years, and BTC finished August trading at $47,110.Regardless of the price, adoption by institutional investors has been growing at a steady pace. On Sept. 13, Morgan Stanley, one of the largest banks in the United States, appointed a lead cryptocurrency analyst for its dedicated cryptocurrency research team.But the most significant positive trigger for a 50% or higher bull run comes from a potential exchange-traded fund (ETF) approval by the United States Securities and Exchange Commission (SEC). Fidelity Digital Assets, an investment arm of the $4.2 trillion global fund manager, held a private meeting on Sept. 8 with several SEC officials to discuss the benefits and risks of a Bitcoin tradable product.Fidelity filed for a Bitcoin ETP called the Wise Origin Bitcoin Trust in March 2021, but the regulator continues to procrastinate on issuing their final decision. Furthermore, over 20 similar applications from other firms have been made since and none have yet been; analyzed by the SEC.Bitcoin options aggregate open interest for Sept. 3. Source: Bybt.comThe Sept. 17 expiry will be a test of strength for bears because 88% of the $310 million put (sell) options have been placed at $47,000 or lower. Consequently, if BTC trades above that price on Sept. 17, the neutral-to-bearish put option open interest gets cut to a meager $36 million. A put option is a right to sell Bitcoin at a predetermined price on the set expiry date. Thus, a $45,000 put option becomes worthless if BTC trades above such price at 8:00 am UTC on Sept. 17.The bulls apparent advantage is misleadingA broader view also gives bulls some advantage as the call (buy) options instrument’s total open interest stands at $500 million, a 62% lead according to the call-to-put ratio. However, this data is misleading because the bulls’ excessive optimism could wipe out most of their bets. For example, if the Bitcoin expiry price is below $47,000, their open interest is reduced to $34 million. After all, what good is a right to acquire Bitcoin at $52,000 if it’s trading below that price?Below are the four most likely scenarios that consider the current price levels. The imbalance favoring either side represents the potential profit from the expiry. The data below shows how many contracts will be available on Friday, depending on the expiry price.Between $45,000 and $46,000: 240 calls vs. 1,980 puts. The net result is $78 million favoring the protective put (bear) instruments.Between $46,000 and $48,000: The net result is balanced between bears and bulls.Between $48,000 and $50,000: 3,500 calls vs. 620 puts. The net result is $143 million favoring the call (bull) options.Above $50,000: 4,150 calls vs. 260 puts. The net result is complete dominance of $195 million from bullish instruments.This crude estimate considers call (buy) options being exclusively used in bullish strategies and put (sell) options in neutral-to-bearish trades. Unfortunately, real life is not that simple because it’s possible that more complex investment strategies have been deployed.Incentives are in place for bulls to try to break $50,000Both buyers and sellers will show their strength on the hours preceding Friday’s expiry, and the bears will try to minimize the damage by keeping the price below $48,000. On the other hand, the bulls have decent control over the situation if BTC remains above such a level.The highest stress level for bears is $50,000, where bulls have significant incentives to dominate the weekly expiry and land a decent $195 million advantage.There’s still room for additional volatility ahead of Friday, and the bulls seem to be better positioned.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 $50K as Friday’s $655M BTC options expiry approaches

Bitcoin bulls target $50K as Friday’s $655M BTC options expiry approaches

Bitcoin (BTC) failed to break the critical $50,000 psychological barrier on Aug. 23 and has since then retested the $47,000 support. If historical data plays any role in Bitcoin price, the month of September presented negative performances in 4 of the previous 5 years.Cointelegraph contributor and market analyst Michaël van de Poppe recently said that Ether’s (ETH) break above $3,500 could be a leading indicator for Bitcoin’s next bull run, and now that Ether trades at $3,700, traders anxiously await BTC’s next move. Bulls could be excited for El Salvador’s ‘Bitcoin Law,’ which is scheduled to take effect on Sept. 7. In addition, the recent $150 million Bitcoin Trust fund approval by the country’s Legislative Assembly is another potentially bullish development. The money will be used to support the installation of government-backed crypto ATMs and to offer incentives that encourage the adoption of Chivo, the government-backed digital wallet.This week Coinbase also saw a large Bitcoin outflow after a relatively stable period. The move brought the exchange’s balance below 700,000 BTC, a figure last seen in Dec. 2017. These movements are usually considered bullish because they signal that holders are less likely to sell coins in the short term.Bitcoin options aggregate open interest for Sept. 3. Source: Bybt.comThe Sept. 3 expiry will be a test of strength for bulls because 93% of the $390 million call (buy) options have been placed at $48,000 or higher.Moreover, these neutral-to-bullish instruments dominate the weekly expiry by 48% compared to the $265 million protective put options.However, the 1.48 call-to-put ratio is deceiving because the excessive optimism seen from bulls could wipe out most of their bets if Bitcoin price remains below $48,000 at 8:00 am UTC on Friday. After all, what good is a right to acquire Bitcoin at $52,000 if it’s trading below that price?Bears were also caught by surprise78% of the put options, where the buyer holds a right to sell Bitcoin at a preestablished price, have been placed at $46,000 or lower. These neutral-to-bearish instruments will become worthless if Bitcoin trades above that price on Friday morning. Below are the four most likely scenarios that consider the current price levels. The imbalance favoring either side represents the potential profit from the expiry.Between $45,000 and $46,000: 140 calls vs. 1,220 puts. The net result is $48 million favoring the protective put (bear) instruments.Between $46,000 and $48,000: 590 calls vs. 735 puts. The net result is balanced between bears and bulls.Between $48,000 and $50,000: 1,930 calls vs. 120 puts. The net result is $88 million favoring the call (bull) options.Above $50,000: 3,310 calls vs. 0 puts. The net result is a complete dominance with $165-million worth of bullish instruments.The above data shows how many contracts will be available on Friday, depending on the expiry price. This crude estimate considers calls (buy) options being used in bullish strategies, whereas put (sell) options exclusively in neutral-to-bearish trades. Unfortunately, real life is not that simple because it’s possible that more complex investment strategies are being deployed. For example, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin above a specific price. Still, there’s no easy way to measure this effect, so the simple analysis above is the best guess.Incentives are in place for bulls to try to break $50,000These two competing forces will show their strength, and the ears will try to minimize the damage. On the other hand, the bulls have modest control over the situation if BTC price remains above $48,000. The most important test will be the $50,000 level because bulls have significant incentives to obliterate every single protective put option and land a $165 million advantage.The bear’s only hope resides in some surprise regulatory newsflow or a negative outcome for Bitcoin price coming from the U.S. jobless claims data on Sept. 2. Even though there’s still room for additional volatility ahead of the expiry, the bulls seem to be better positioned.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 traders expect volatility ahead of Friday’s $820M options expiry

Ethereum traders expect volatility ahead of Friday’s $820M options expiry

Ether (ETH) will face a critical $820 million monthly options expiry on Friday, Aug. 27. That will be the first time that $3,000 and higher options will have a real fighting chance, even though bulls seem to have missed a good opportunity to dominate the expiry because they were too optimistic about Ether’s price potential.It is unclear why $140 million of the neutral-to-bullish call options were placed between $3,800 and $8,000, but these instruments will likely become worthless as the monthly expiry approaches.Competition and the success of interoperability-focused protocols impact Ether priceThe Ethereum network has struggled due to its own success, which consistently leads to network congestion and transaction fees of up to $20 and higher. Furthermore, the rise of nonfungible tokens and decentralized finance imposed further stress on the network.Maybe some of the inflow that was supposed to move Ether price up went to its competitors, which presented stellar performances recently. For example, Cardano (ADA) surged over 100% quarter-to-date as investors expect its long-awaited smart contracts to launch on Sept. 12. Solana (SOL), another smart contract contender, captured one-third of the inflows to crypto investment products over the last week, according to CoinShares “Digital Asset Fund Flows Weekly.”Lastly, layer-two scaling solutions like Polygon (MATIC) have also seen 150% gains after successfully bringing DeFi projects into its interoperability pool and launching a decentralized autonomous organization (DAO) to scale projects on the software development kits.Ether options aggregate open interest for Aug. 27. Source: Bybt.comNotice how the $3,000 level vastly dominates Friday’s expiry with 30,900 ETH option contracts, representing a $100 million open interest.The initial call-to-put analysis shows a slight prevalence of the neutral-to-bullish call instruments, with 13% larger open interest. However, bears seem to have been taken by surprise because 83% of their bets have been placed at $2,900 or lower.To succeed, bears need to push and hold Ether price below $2,900Nearly half of the neutral-to-bullish call options have expiry prices set at $3,500 or higher. These instruments will become worthless if Ether trades below that price on Friday. The options expiry happens at 8:00 am UTC, so traders might expect some price volatility nearing the event.Below are the three most likely scenarios that will likely happen and their estimated gross result. Keep in mind that some investors could be trading more complex strategies, including market-neutral ones that use calls and protective puts. Consequently, this estimation is somewhat rudimentary.The simplistic analysis weighs the call (buy) options against the put (sell) options available at each strike level. So, for example, if Ether’s expiry happens at $3,050, every neutral-to-bullish call option above $3,000 becomes worthless.Below $2,900: 36,360 calls vs. 32,700 puts. The net result is virtually balanced.Between $2,900 and $3,000: 36,770 calls vs. 20,320 puts. The net result favors the neutral-to-bullish instruments by $48 million.Between $3,000 and $3,200: 55,660 calls vs. 8,320 puts. The net result favors the neutral-to-bullish instruments by $147 million.Above $3,200: 62,260 calls vs. 1,490 puts. The net result favors the neutral-to-bullish instruments by $197 million.Bears will try to minimize the damage, and luckily for them, the honeypot for a favorable price move doesn’t look worthwhile of a significant effort from bulls.As for the excessively optimistic options traders, they should better rethink their strategy for the September expiry. The Ethereum network seems to be its own biggest enemy because the increasing adoption has fueled the rise in competitors’ decentralized finance applications.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.

Bitcoin gains strength as Friday’s $600M BTC options expiry approaches

Bitcoin gains strength as Friday’s $600M BTC options expiry approaches

In the past 7 days, Bitcoin (BTC) failed to break through the $48,000 resistance, but the price remained flat even as Minneapolis Federal Reserve chairman Neel Kashkari bashed the industry. During an appearance at the Pacific NorthWest Economic Region annual summit on August 17, Kashkari said:”So far what I’ve seen is…95% fraud, hype, noise and confusion.”Moreover, according to Yahoo Finance, Kashkari specifically targeted Bitcoin when he mentioned that its only use case has been funding illicit activities.Even with the current pullback, Bitcoin investors should be glad that the $44,000 support held because the Federal Reserve also signaled its intent to unwind its $120-billion monthly purchases of Treasury and mortgage-backed securities. With less stimulus to support the markets, investors naturally become more risk-averse, which could have caused a retracement on the Bitcoin price.With that in mind, traders should be less worried about Friday’s $600 million Bitcoin options expiry because when the markets hold during potentially negative news, it can be interpreted as bullish.Bitcoin Aug. 20 options aggregate open interest. Source: Bybt.comThe call-to-put ratio currently stands at 1.43 and favors the neutral-to-bullish call options. This data reflects the 7,838 Bitcoin call options stacked against the 5,465 put options.Bulls seem confident in the $44,000 supportCurrently, there are less than 17 hours until Friday’s expiry, and there is a slim chance that a $50,000 call option could be of any use. This means that even if Bitcoin trades at $49,900 at 8:00 am UTC on Aug. 20, these options become worthless.Therefore, after excluding the 3,700 ultra-bullish call options contracts above $50,000, the adjusted open interest for the neutral-to-bullish instruments stands at $190 million.An expiry price below $48,000 reduces this figure to $138 million. If bears manage to keep Bitcoin trading below $46,000, only $67 million of these call option contracts will take part in Friday’s expiry.Lastly, the bull’s worst-case scenario happens below $44,000 because it whips out 83% of the neutral-to-bullish call options to leave a meager $24 million open interest in their favor.Related: Bitcoin slides with S&P 500 as Fed signals tapering $120B monthly bond purchasesBears need BTC price below $45,000 to balance the situationBears seem to have been taken by surprise because 73% of the protective put options have been placed below $44,000. Consequently, the instrument’s open interest would be reduced to $65 million if the Bitcoin expiry takes place above that threshold, and this would give bears a $41 million advantage.By keeping Bitcoin price below $45,000, bears might keep the open interest virtually balanced between call options and protective puts.Ultimately, an expiry price above $46,000 increases the bull’s advantage to $105 million, which seems like a good enough reason to justify increased buying pressure ahead of Friday’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.

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