The bears aim to stabilize the Bitcoin price below $46,000 with the $3 billion BTC options expiration Friday. This week’s price action shows that Bitcoin bulls are a little too enthusiastic about Friday’s $3 billion BTC option expiration. The combination of bearish factors this week was enough to push the Bitcoin (BTC) price to its lowest levels in 46 days, destroying almost 86% of the $2 billion September buy options that expire on September 24. Detail Cryptocoin. com
Critical Friday for Bitcoin
There’s still room for some surprises, especially considering the deadline is September 24 at 8:00 am. However, the incentives for the bears seem small because the test of under $40,000 on Sept. 21 resulted in less than $250 million in futures contract liquidations. On September 22, Evergrande Group eased some default fears after it confirmed it would pay interest on an onshore bond. Despite this, investors expect the company to be unable to pay off dollar-denominated bonds held predominantly by international investors.
The recent move above $48,000 on Sept. 18 and 19 was not enough to break the 20-day average resistance. No short-term action came from the September 22 interview with United States Securities and Securities Commission (SEC) Chairman Gary Gensler in the Washington Post. If historical data plays any role in Bitcoin price, September has performed negatively in four of the previous five years. This downward trend will continue if BTC closes September below $47.110, the closing price on August 31.
September expiration will be a test of strength for the bulls as 86% of $2 million buy options are placed at $46,000 or higher. As a result, if BTC trades below this price on September 17, the neutral-bearing option will be reduced to $285 million. A call option is the right to buy Bitcoin at a predetermined price on the specified expiration date. Therefore, a $50,000 call option becomes worthless if BTC trades below that price on September 24 at 08:00 UTC.
Bulls dominate BTC price
A broader view gives the bulls a significant advantage, as the total open position of the buy (buy) options instrument is $2 billion, which gives a 90% lead to neutral-bearish options. However, these data are misleading because the bulls’ over-optimism will likely wipe out most of their bets. Even the smaller $1.05 billion open interst from put options may be enough to offset these competing forces. Below are the four most likely scenarios that take into account current price levels. The imbalance in favor of both parties represents potential profit at maturity. The data below shows how many contracts will be available on Friday, based on the expiry price.
38. 000 to 40,000 USD: 3,390 purchases and 8,695 sales. The net result is $21 million in favor of protective sell (bear) instruments. Between $40,000 and $46,000: The net result is balanced between bears and bulls. Between $46,000 and $50,000: 11,820 purchases and 3,050 sales. The net result is $42 million supporting buy (bull) options. Over $50,000: 16,370 purchases etc. 1. 400 sales. Taurus instruments would have a lead of $75 million. This rough estimate naively only considers (buy) options used in bullish strategies and sell options in neutral-bearish trades. Meanwhile, real life is not so simple because more complex investment strategies may have been applied.
There are incentives for bears to keep BTC below $46,000
Buyers and sellers will maximize their efforts during Friday’s saadollarser before it ends. The bears will try to minimize the damage by keeping the price below $46,000. On the other hand, if BTC stays above such a level, the bulls have good control over the situation. Is $75 million a profit big enough to justify a rally over $50,000? Not really, but as stated earlier, these are simpledollars, enhanced estimates. This will mostly depend on how the market makers and arbitrage tables are positioned, which is a game for everyone to guess. There’s still room for more volatility before Friday, but both sides look equally balanced despite the flashy $3 billion headline.