expiry

Bitcoin derivatives data shows bulls positioning for further BTC price upside

BTC price continues to show strength, and derivatives data suggests that bulls intend to press Bitcoin higher.

Bitcoin (BTC) price maintained the $30,000 support as lower-than-expected U.S. Consumer Price Index (CPI) data was released on April 12. The official inflation rate for March increased 5% year on year, which was slightly less than the 5.1% consensus. It was the lowest reading since May 2021 but is still significantly higher than the U.S. Federal Reserve’s 2% target.

The data suggests that inflation is no longer the driving force behind Bitcoin’s rally, and investors’ focus has shifted from the impact of inflationary pressure to potential recession risks after the banking crisis revealed how fragile the financial system was following the Federal Reserve’s 12-month hike in interest rates from 0.10% to 4.85%.

Aside from the Silicon Valley Bank bankruptcy and the government-backed sale of Credit Suisse to UBS, several warning signs of a macroeconomic downturn have emerged.

The most recent ISM Purchasing Managers Index data fell to its lowest level since May 2020, indicating an economic contraction. According to Federal Reserve documents released on April 12, the aftermath of the U.S. banking crisis is likely to push the economy into a “mild recession” later this year. Because of the crisis, some have speculated that the Fed will hold off on raising interest rates, but officials affirmed that more effort is needed to keep inflation under control.

According to a Moody’s Analytics report, commercial real estate prices fell 1.6% in February, the most since the 2008 financial crisis. Furthermore, the national office vacancy rate reached 16.5%, indicating the severity of the economic difficulties that businesses are currently facing.

Whatever the reason for Bitcoin’s 50% rally between March 11 and April 11, it demonstrates resilience to FUD — fear, uncertainty and doubt — including the Securities and Exchange Commission’s Wells notice against Coinbase on March 22 and the Commodity Futures Trading Commission filing a suit against Binance and its CEO, Changpeng Zhao, on March 27. By holding the $30,000 support, Bitcoin demonstrates that the positive momentum can continue regardless of whether inflation remains above 5%.

Bulls are better positioned for the weekly BTC options expiry

Not everyone is cheering the rally, particularly traders who have placed bearish bets using Bitcoin options. The April 14 open interest for BTC options expiry is $950 million, with $490 million in call (buy) options and $460 million in put (sell) options. Bears have been caught off guard, with less than 7% of their bets exceeding $29,000.

*Bitcoin options aggregate open interest for April 14. Source: CoinGlass*

Below are the four most likely scenarios based on the current price action. The number of call (buy) and put (sell) options contracts available on April 14 varies depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $28,000 and $29,000: 2,600 calls vs. 1,800 puts. The net result is balanced between call and put options.
Between $29,000 and $30,000: 6,700 calls vs. 500 puts. The net result favors the call (buy) instruments by $110 million.
Between $30,000 and $30,500: 8,500 calls vs. 200 puts. Bulls increase their advantage to $250 million.
Between $30,500 and $31,500: 11,300 calls vs. 100 puts. Bulls’ advantage increases to $350 million.

This rough estimate considers only call options in bullish bets and put options in neutral-to-bearish trades. Nonetheless, this oversimplification excludes more complex investment strategies. A trader, for example, could have sold a put option, effectively gaining positive exposure to Bitcoin above a certain price, but this effect is difficult to estimate.

Bears are unlikely to reverse their situation

Bulls are expected to push Bitcoin above $30,500 on April 14 at 8:00 am UTC to profit an additional $100 million. Bears, on the other hand, would need to pressure Bitcoin’s price below $29,000 in order to balance the scales. However, bears recently suffered significant losses as BTC futures short contracts were forcibly liquidated to the tune of $128 million between April 9 and April 11.

As the most likely scenario favors Bitcoin bulls, their profits will most likely be used to reinforce the $30,000 support. Bears might consider licking their wounds and waiting for additional actions from regulators, as the macroeconomic scenario is currently bullish for supply-capped assets.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

$1.12B in Bitcoin options expire this week, and bulls appear to be at a disadvantage

Commodities rallied as the United States Treasury struggled with the banking crisis, but Bitcoin bulls also overplayed their hand in this week’s options expiry.

Bitcoin’s (BTC) 43% rally between March 10 and March 20 surprised options traders and this is proven by the minimal14% of the $1.12 billion open interest set to expire on April 7 being placed at $28,000 and higher.

The positive price movement can be partially attributed to an increase in commodity demand, as investors perceive risks in the central bank’s emergency funding programs, as injecting liquidity causes inflationary upward pressure.

According to Urban Angehrn, CEO of the Swiss Financial Market Supervisory Authority (FINMA), if Credit Suisse had not been rescued, “many other Swiss banks would probably have faced a run on deposits.” Angehrn added that “there was a high probability that the resolution of a global systemically important bank would have led to contagion effects and jeopardized financial stability in Switzerland and globally.”

Investors’ appetite for commodities vastly increased after the U.S. Treasury Department reportedly discussed the possibility of expanding the Federal Deposit Insurance Corporation insurance for bank deposits on March 21. Oil prices measured by the WTI have rallied 23.5% since March 20, and gold broke above $2,000 on April 5 — its highest daily close since Aug. 2020.

An unexpected shockwave on a $33 trillion asset class that was previously thought to be a safe haven for inflation could have benefited the commodity sector as well. Morgan Stanley Wealth Management has issued a warning about the commercial real estate market, predicting trouble with refinancing.

According to the bank’s report, the sector has been hard hit by increases in remote work and corporate layoffs, resulting in vacancy rates reaching a 20-year high. As a result, investment bank strategists predict a 40% drop in commercial real estate prices and state that “more than 50% of the $2.9 trillion in commercial mortgages will need to be renegotiated in the next 24 months when new lending rates are likely to be up by 350 to 450 basis points.”

Bitcoin bulls may have benefited from increased demand for inflation protection, but some may have squandered the opportunity by placing size bets of $30,000 or higher.

Bulls placed 85% more bets, which did not translate to victory

The weekly BTC options expiry has $1.2 billion in open interest, but the actual figure will be lower because bulls have concentrated their bets on Bitcoin price trading above $29,000.

*Bitcoin options aggregate open interest for April 7. Source: CoinGlass*

The 1.85 call-to-put ratio reflects the difference in open interest between the $720 million call (buy) options and the $390 million put (sell) options. However, the outcome will be much lower as bulls were overly optimistic.

For instance, if Bitcoin’s price remains near $28,100 on April 7 at 8:00 am UTC, there will be only $125 million in call options. This distinction arises since the right to buy Bitcoin at $29,000 or $30,000 is rendered void if BTC trades below that on the expiry.

Bulls and bears have similar incentives, so the outcome is unpredictable

Below are the four most likely scenarios based on the current price action. The number of options contracts available on April 7 for call (buy) and put (sell) instruments varies depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $26,000 and $27,000: 300 calls vs. 6,000 puts. The net result favors the put (sell) instruments by $150 million.
Between $27,000 and $28,000: 1,200 calls vs. 3,500 puts. The net result favors the put instruments by $60 million.
Between $28,000 and $29,000: 4,500 calls vs. 1,100 puts. Bulls flip the tables and profit $100 million.
Between $29,000 and $30,000: 8,500 calls vs. 100 puts. Bulls’ advantage increases to $240 million.

This rough estimate considers only put options in bearish bets and call options in neutral-to-bullish trades. Nonetheless, this oversimplification excludes more complex investment strategies. A trader, for example, could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but this effect is difficult to estimate.

The critical level for the weekly expiration is $28,000, but it is impossible to predict the outcome due to increased economic recession risks and market volatility. If bulls are able to secure a $100 million, those funds will most likely be used to further strengthen the support level.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

3 reasons why Bitcoin bulls are well positioned to profit from this week’s $4.2B options expiry

$4.2 billion in BTC options expire on March 31, and despite weeks of harsh regulatory action against the crypto sector, bulls are well positioned to profit.

Regulation continues to be the primary concern for Bitcoin bulls, especially after the Commodity Futures Trading Commission (CFTC) sued Binance for trading and derivatives law violations. The regulator wants Binance to repay the trading profits, revenues, salaries, commissions, loans and fees it received from United States citizens, as well as paying civil penalties for the violations.

Bitcoin’s (BTC) rise was also fueled by a shift in sentiment toward risk assets after U.S. Federal Reserve Chair Jerome Powell said interest rate hikes are no longer the default move to curb inflation. The central bank understood that the current situation will likely “result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes.”

Fixed-income investors earn more when interest rates rise, so buying stocks and commodities becomes less appealing. As a result, by reversing the strategy and adding $339 billion in liabilities in two weeks, the Fed chose to contain the banking crisis, which may cause inflation to spiral out of control.

Given the accretive scenario for risk assets, Bitcoin bulls can profit up to $1.4 billion in Friday’s monthly options expiry.

Bitcoin bears were caught completely off-guard

The open interest for the March 31 options expiry is $4.2 billion, but the actual figure will be lower since bears were expecting sub-$26,500 price levels. These traders were caught by surprise as Bitcoin gained 32% between March 12 and March 17.

*Bitcoin options aggregate open interest for March 31. Source: CoinGlass*

The 1.34 call-to-put ratio reflects the imbalance between the $2.4 billion call (buy) open interest and the $1.8 billion put (sell) options. However, if Bitcoin’s price remains near $28,000 at 8:00 am UTC on March 31, only $25 million worth of these put (sell) options will be available. This difference happens because the right to sell Bitcoin at $26,000 or $27,000 is useless if BTC trades above that level on expiry.

Bulls aim for $29,000 to secure a record-breaking $1.4 billion profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on March 31 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $25,000 and $26,000: 27,200 calls vs. 12,700 puts. The net result favors the call (bull) instruments by $360 million.
Between $26,000 and $27,000: 32,300 calls vs. 8,500 puts. The net result favors the call (bull) instruments by $620 million.
Between $27,000 and $28,000: 38,100 calls vs. 3,000 puts. Bulls increase their advantage to $1.2 billion.
Between $28,000 and $30,000: 48,300 calls vs. 400 puts. Bulls dominate by profiting $1.4 billion.

This crude estimate considers the call options used in bullish bets and the put options exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.

For example, a trader could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but unfortunately, there’s no easy way to estimate this effect.

The bears best hope relies on regulatory FUD

Bitcoin bulls must push the price above $29,000 by March 31 to secure a potential $1.4 billion profit. Bear’s best shot, on the other hand, is more regulatory FUD about stablecoins or major crypto exchanges — which has so far been fruitless.

Considering the bullish momentum created by the Fed’s inability to continue raising interest rates, bulls are well positioned for the March BTC monthly options expiry. Most likely, those profits will be used to further strengthen the $28,000 support, so the expected outcome is especially concerning for bears.

Bitcoin has been hovering around $28,000 for the past ten days, but the cryptocurrency has gained 70.5% year to date. Until March 17, Bitcoin was trading below $25,000 and this explains why most bearish bets for March’s $4.2 billion options expiry were placed at $26,500 or lower.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin bulls’ desire for a trend reversal could be obliterated by this week’s $565M options expiry

Significant headwinds continue to batter BTC, and this week’s options expiry is unlikely to provide any relief.

Bitcoin (BTC) fell below a four-day narrow trading range near $22,400 on March 7 following comments by United States Federal Reserve Chair Jerome Powell before the Senate Banking Committee. During the congressional appearance, the Fed chairman warned that he bank is prepared to tame inflation by pushing for more significant interest rate increases.

Powell added that “the ultimate level of interest rates is likely to be higher than previously anticipated” and that recent economic data was “stronger than expected.” These remarks significantly increased investors’ expectations of a 50 basis point interest rate hike on March 22, putting pressure on risk assets such as stocks, commodities and Bitcoin.

That movement could explain why the $565 million Bitcoin weekly options expiry on March 10 will almost certainly favor bears. Nonetheless, additional negative crypto market events might have also played a significant role.

Bitcoin from the Silk Road and Mt. Gox are on the move

The movement of multiple wallets linked to U.S. law enforcement seizures on March 8 added to the price pressure on Bitcoin investors. Over 50,000 Bitcoin worth $1.1 billion were transferred, according to data shared by on-chain analytics firm PeckShield.

Furthermore, 9,860 BTC were sent to Coinbase, raising concerns about the coins being sold on the open market. These wallets are directly linked to the former Silk Road darknet marketplace and were seized by law enforcement in November 2021.

Mt. Gox creditors have until March 10 to register and choose a method of compensation repayment. The movement is part of the 2018 rehabilitation plan, and creditors must choose between “early lump sum payment” and “final payment.”

It is unclear when creditors can expect to be paid in cryptocurrency or fiat currency, but estimates indicate that the final settlement could take several years.

As a result, Bitcoin’s price drop to $22,000 on March 8 effectively confirmed bears’ advantage on the March 10 options expiry.

Bulls placed far more bets, but most will be worthless

The March 10 options expiry has $565 million in open interest, but the actual figure will be lower because bulls have concentrated their bets on Bitcoin trading above $23,000.

*Bitcoin options aggregate open interest for March 10. Source: CoinGlass*

The 1.63 call-to-put ratio reflects the disparity in open interest between the $350 million call (buy) options and the $215 million put (sell) options. However, the expected outcome is likely to be much lower, as bulls were caught off guard when Bitcoin fell below $23,000 on March 3.

For example, if the price of Bitcoin remains near $22,100 at 8:00 am UTC on March 10, only $6 million in call (buy) options will be available. This difference occurs because the right to purchase Bitcoin at $22,500 or $24,000 is rendered null if BTC trades below that level on expiry.

The most likely outcomes favor bears by a wide margin

Below are the four most likely scenarios based on the current price action. The number of options contracts available on March 10 for call (bull) and put (bear) instruments varies depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $20,000 and $21,000: 0 calls vs. 7,200 puts. The net result favors the put (bear) instruments by $150 million.
Between $21,000 and $22,000: 100 calls vs. 5,000 puts. The net result favors the put (bear) instruments by $105 million.
Between $22,000 and $23,000: 1,400 calls vs. 1,900 puts. Bears have a modest advantage, profiting some $55 million.
Between $23,000 and $24,000: 4,600 calls vs. 600 puts. The net result favors the call (bull) instruments by $95 million.

This rough estimate takes into account only call options in bullish bets and put options in neutral-to-bearish trades. Nonetheless, this oversimplification excludes more complex investment strategies.

A trader, for example, could have sold a call option, effectively gaining negative exposure to Bitcoin above a certain price, but there is no easy way to estimate this effect.

To turn the tables and secure a potential $95 million profit, Bitcoin bulls must push the price above $23,000 on March 10. However, given the negative macroeconomic pressure and the FUD emanating from Mt. Gox and Silk Road, the odds favor bears in this week’s options expiry.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin price searches for direction ahead of this week’s $710M BTC options expiry

BTC’s recent price swings are the result of regulatory pressure and the Federal Reserve’s stance on U.S. inflation.

Bitcoin (BTC) bulls laid most of their options at $24,500 and higher for the March 3 options expiry, and given the recent bullishness seen from BTC, who can blame them? On Feb. 21, Bitcoin’s price briefly traded above $25,200, reflecting an 18% gain in eight days. Unfortunately, regulatory pressure on the crypto sector increased, and despite no effective measures being announced, investors are still wary and reactive to remarks from policymakers.

For instance, on Feb. 23, U.S. Securities and Exchange Commission Chair Gary Gensler claimed that “everything other than Bitcoin” falls under the agency’s jurisdiction. Gensler noted that most crypto projects “are securities because there’s a group in the middle and the public is anticipating profits based on that group.”

March 1 comments from two U.S. Federal Reserve officials reiterated the necessity for even more aggressive interest rate increases to curb inflation. Minneapolis Fed President Neel Kashkari’s and Atlanta Fed President Raphael Bostic’s comments also decreased investors’ expectations of a monetary policy reversal happening in 2023.

The stricter stance from the macroeconomic and crypto regulatory environment caused investors to rethink their exposure to cryptocurrencies. Nevertheless, Bitcoin’s price decline practically extinguished bulls’ expectation for a $24,500 or higher options expiry on March 3, so their bets are unlikely to pay off as the deadline approaches.

Bulls were “rug pulled” by negative regulatory remarks

The open interest for the March 3 options expiry is $710 million, but the actual figure will be lower since bulls became overconfident after Bitcoin traded above $25,000 on Feb. 21.

*Bitcoin options aggregate open interest for March 3. Source: CoinGlass*

The 1.12 call-to-put ratio reflects the imbalance between the $400 million call (buy) open interest and the $310 million put (sell) options. However, the expected outcome is likely much lower regarding active open interest.

For example, if Bitcoin’s price remains near $23,600 at 8:00 am UTC on March 3, only $50 million worth of these call (buy) options will be available. This difference happens because the right to buy Bitcoin at $24,000 or $25,000 is useless if BTC trades below that level on expiry.

Bears have set their trap below $23,000

Below are the four most likely scenarios based on the current price action. The number of options contracts available on March 3 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $22,000 and $22,500: 700 calls vs. 6,200 puts. The net result favors the put (bear) instruments by $120 million.
Between $22,500 and $23,000: 1,000 calls vs. 4,800 puts. The net result favors the put (bear) instruments by $85 million.
Between $23,000 and $24,000: 2,100 calls vs. 1,800 puts. The net result is balanced between bulls and bears.
Between $24,000 and $25,000: 4,900 calls vs. 400 puts. The net result favors the call (bull) instruments by $110 million.

For example, a trader could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but unfortunately, there’s no easy way to estimate this effect.

Could weak U.S. mortgage applications could benefit BTC bulls?

Bitcoin bulls must push the price above $24,000 on March 3 to secure a potential $110 million profit. However, data from an announcement from the Mortgage Bankers Association on March 1 might turn the tide favorably for BTC. The weekly volume of mortgage applications declined by 44% versus the same period in 2022, hitting the lowest level in 28 years.

Considering the negative pressure from regulators and investors’ eying the next Fed decision on March 22, bears have good odds of pressuring BTC below $23,000 and profiting by $85 million in the March 3 weekly options expiry. Still, there’s hope for Bitcoin bulls depending on how traditional markets react to the bearish mortgage applications data.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin bears attempt to pin BTC price under $23K ahead of this month’s options expiry

$1.9 billion in BTC options are set to expire on Feb. 24, and bulls are well positioned to profit despite the Federal Reserve’s intention to cool off the U.S. economy.

Bitcoin’s (BTC) 16% price gain between Feb. 13 and Feb. 16 practically extinguished the bears’ expectation for a monthly options expiry below $21,500. As a result of the abrupt rally, these bearish bets are unlikely to pay off, especially since the expiry occurs on Feb. 24. However, bulls were not counting on the strong price rejection at $25,200 on Feb. 21, and this reduces their odds of securing a $480 million profit in this month’s BTC options expiry.

Bitcoin investors’ primary concern is a stricter monetary policy as the U.S. Federal Reserve increases interest rates and reduces its $8 trillion balance sheet. Feb. 22 minutes from the latest Federal Open Market Committee meeting showed that members were in consensus on the most recent 25 basis point rate hike and that the Fed is willing to continue raising rates as long as deemed necessary.

St. Louis Fed President James Bullard told CNBC on Feb. 22 that a more aggressive interest rate hike would give them a better chance to contain inflation. Bullard said:

“Let’s be sharp now, let’s get inflation under control in 2023.”

If confirmed, the increased interest rate pace would be negative for risk assets, including Bitcoin, as it draws more profitability for fixed-income investments.

Even if the newsflow remains negative, bulls still can profit up to $480 million in Friday’s monthly options expiry. However, bears can still significantly improve their situation by pushing the BTC price below $23,000.

Bears were not expecting Bitcoin to hold $22,000

The open interest for the Feb. 24 monthly options expiry is $1.91 billion, but the actual figure will be lower since bears expected prices below $23,000. Nevertheless, these traders were surprised as Bitcoin gained 13.5% between Feb. 15 and Feb. 16.

*Bitcoin options aggregate open interest for Feb. 24. Source: CoinGlass*

The 1.55 call-to-put ratio reflects the imbalance between the $1.16 billion call (buy) open interest and the $750 million put (sell) options. If Bitcoin’s price remains near $24,000 at 8:00 am UTC on Feb. 24, only $125 million worth of these put (sell) options will be available. This difference happens because the right to sell Bitcoin at $22,000 or $23,000 is useless if BTC trades above that level on expiry.

Bulls aim for $23,000 to secure a $155 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Feb. 17 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes these theoretical profits:

Between $22,500 and $23,000: 12,500 calls vs. 10,700 puts. The net result favors the call (bull) instruments by $40 million.
Between $23,000 and $24,000: 16,200 calls vs. 7,600 puts. The net result favors the call (bull) instruments by $200 million.
Between $24,000 and $24,500: 21,100 calls vs. 5,200 puts. Bulls increase their advantage to $385 million.
Between $24,500 and $25,000: 23,200 calls vs. 3,600 puts. Bulls dominate by profiting $480 million.

For example, a trader could have sold a call option, effectively gaining inverse exposure to Bitcoin above a specific price, but unfortunately there’s no easy way to estimate this effect.

The Fed’s tightening policy is the bears’ best shot

Bitcoin bulls must push the price above $24,500 on Feb. 24 to secure a potential $480 million profit. On the other hand, the bears’ best-case scenario requires a 3.5% price dump below $23,000 to minimize their losses.

Considering the negative pressure from the Fed’s desire to weaken the economy and contain inflation, bears have good odds of improving their situation and settling with a $40 million loss on Feb. 24. This movement might not be successful, but it is the bears’ only way out of multi-million losses on the BTC monthly options expiry.

Looking at a broader time frame, investors still believe the Fed is destined to reverse the current monetary policy in the second half of 2023 — possibly paving the way for a sustainable rally ahead of the April 2024 Bitcoin block reward halving.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin bulls aim to hold this week’s BTC gains leading into Friday’s $675M options expiry

$675 million in BTC options are set to expire on Feb. 17, but bears could aim to take control by pushing Bitcoin’s price below $22,000.

The price of Bitcoin (BTC) gained 6.3% just two days after reaching $21,370 on Feb. 13, which was the lowest level seen in more than three weeks. The price recovery can be partially explained by the Feb. 14 U.S. Consumer Price Index data displaying a 6.4% increase in year-over-year inflation in January.

While the U.S. Federal Reserve continues to monitor the overheated economy, the most likely scenario is further interest rate hikes to curb inflation. The unintended consequence is the heightened government debt cost, creating a bullish environment for scarce assets such as commodities, stock market and cryptocurrencies.

The price gain of Bitcoin practically extinguished bears’ expectation for a sub-$21,500 options expiry on Feb. 17, so their bets are unlikely to pay off as the deadline approaches.

Bitcoin investors’ primary concern is the possibility of further impacts from regulators following the U.S. Securities and Exchange Commission ordering Kraken to halt its staking rewards program on Feb. 9 and the crackdown on Binance USD (BUSD) stablecoin issuing on Feb. 13.

Even if the newsflow remains negative, bulls still can profit from Feb. 17’s options expiry by keeping the BTC price above $22,500, but the situation can easily flip and favor bears.

Bears were not expecting the $22,000 level to hold

The open interest for the Feb. 17 options expiry is $675 million, but the actual figure will be lower since bears were expecting sub-$22,000 price levels. These traders became overconfident after Bitcoin traded below $21,500 on Feb. 13.

*Bitcoin options aggregate open interest for Feb. 17. Source: CoinGlass*

The 1.12 call-to-put ratio reflects the imbalance between the $355 million call (buy) open interest and the $320 million put (sell) options. If Bitcoin’s price remains near $22,700 at 8:00 am UTC on Feb. 17, only $24 million worth of these put (sell) options will be available. This difference happens because the right to sell Bitcoin at $21,000 or $22,000 is useless if BTC trades above that level on expiry.

Bulls aim for $23,000 to secure a $155 million profit

Between $21,000 and $22,000: 700 calls vs. 5,500 puts. The net result favors the put (bear) instruments by $100 million.
Between $22,000 and $22,500: 1,800 calls vs. 1,500 puts. The net result is balanced between bears and bulls.
Between $22,500 and $23,000: 3,800 calls vs. 1,100 puts. The net result favors the call (bull) instruments by $60 million.
Between $23,000 and $24,000: 6,900 calls vs. 200 puts. The net result favors the call (bull) instruments by $155 million.

For example, a trader could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but unfortunately, there’s no easy way to estimate this effect.

Bears might benefit from the impact of regulation

Bitcoin bulls need to push the price above $23,000 on Feb. 17 to secure a potential $155 million profit. On the other hand, the bears’ best-case scenario requires a 3.5% dump below $22,000 to maximize their gains.

Considering the negative pressure from regulators, bears have good odds of flipping the table and avoiding a loss of $60 million or larger on Feb. 17.

More importantly, looking at a broader time frame, there is little room for the Fed to slow down the economy without spiraling the debt interest repayments out of control.

Feb. 17 will be an interesting display of strength between the short-term impact of a hostile crypto regulation environment versus Bitcoin’s long-term scarcity and censorship-resistance benefits.

Bitcoin (BTC) price gained 6.3% just two days after reaching $21,370 on Feb. 13, which was the lowest level seen in more than three weeks. The price recovery can be partially explained by the Feb. 14 U.S. Consumer price index data displaying a 6.4% increase in year-over-year inflation in January.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

$1.48B in Bitcoin options expire on Friday — Will BTC hold $22K?

BTC price has started to correct, and with $1.48 billion in Bitcoin options expiring on Jan. 27, traders are watching to see if the price holds above $22,000.

Bitcoin (BTC) price faced fierce resistance at $23,000 after an 11% rally on Jan. 20, but that was enough to cause $335 million in liquidations for short positions using futures contracts. The 36% year-to-date gain to $22,500 caused bears to be ill-prepared for the $1.48 billion monthly options expiry on Jan. 27.

Bitcoin investors’ sentiment improved after signals pointing to lower inflationary pressure suggested that the U.S. Federal Reserve could soon move away from its interest rate increase and quantitative tightening. Commonly known as a pivot, the trend change would benefit risk assets such as cryptocurrencies.

On Jan. 22, the China-based peer-to-peer trades of USD Coin (USDC) reached a 3.5% premium versus the United States dollar, indicating moderate FOMO by retail traders. This level is the highest in more than 6 months, suggesting excessive cryptocurrency buying demand has pressured the indicator above fair value.

The all-time high on the 7-day Bitcoin hash rate — an estimate of processing power dedicated to mining — also supported the bullish momentum. The indicator peaked at 276.9 exo-hash per second (EH/s) on Jan. 19, signaling a reversion of the recent weakness caused by miners facing financial difficulties.

Despite the bears’ best efforts, Bitcoin has been trading above $20,000 since Jan. 14 — a movement that explains why the $1.48 billion Bitcoin monthly options expiry will vastly benefit bulls despite the recent failure to break the $23,200 resistance.

Bulls were too optimistic, but remain well positioned

Bitcoin’s latest rally on Jan. 20 caught bears by surprise, as a mere 6% of the put (sell) options for the monthly expiry have been placed above $22,000. Thus, bulls are better positioned even though they set nearly 40% of their call (buy) options at $23,000 or higher.

*Bitcoin options aggregate open interest for Nov. 25. Source: CoinGlass*

A broader view using the 1.15 call-to-put ratio shows more bullish bets because the call (buy) open interest stands at $790 million against the $680 million put (sell) options. Nevertheless, most bearish bets will likely become worthless as Bitcoin is up 36% in January.

If Bitcoin’s price remains above $22,000 at 8:00 am UTC on Jan. 27, only $38 million worth of these put (sell) options will be available. This difference happens because there is no use in the right to sell Bitcoin at $21,000 or $22,000 if it trades higher on expiry.

Bears could secure a $595 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Jan. 27 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $20,000 and $21,000: 12,800 calls vs. 7,100 puts. The net result favors bulls by $115 million.
Between $21,000 and $22,000: 17,600 calls vs. 2,800 puts. The net result favors bulls by $320 million.
Between $22,000 and $23,000: 21,200 calls vs. 1,100 puts. Bulls remain in control, profiting $455 million.
Between $23,000 and $24,000: 25,300 calls vs. 0 puts. Bulls completely dominate the expiry, racking up $595 million.

Bitcoin bears need to push the price below $21,000 on Jan. 27 to greatly reduce their losses. However, Bitcoin bears recently had $335 million worth of liquidated leveraged short futures positions, so they likely have less margin required to exert power in the short term.

Consequently, the most probable scenario for the January monthly BTC options expiry is the $22,000 or higher level, providing a decent win for bulls.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin price corrected, but bulls are positioned to profit in Friday’s $580M BTC options expiry

Reduced inflationary pressure fueled crypto investors’ appetite for risk markets, eliminating the possibility of bears profiting from the $580 million Bitcoin options expiry on Jan. 20.

Bitcoin (BTC) price has held above $20,700 for 4 days, fueling bulls’ hope for another leg up to $23,000 or even $25,000. Behind the optimistic move was a decline in inflationary pressure, confirmed by the December 2022 wholesale prices for goods on Jan. 18.

The United States producer price index, which measures final demand prices across hundreds of categories also declined 0.5% versus the previous month.

Eurozone inflation also came in at 9.2% year-on-year in December, marking the second consecutive decline from October’s 10.7% record high. A milder-than-expected winter reduced the risk of a gas shortages and softened energy prices, boosting analysts’ hope of a “soft landing.” According to analysts, a soft landing would avoid a deep recession and possibly convince central banks to curb their interest rate hikes.

This week’s $580 million BTC options expiry on Jan. 20 looks like an easy win for bulls because the surprise seven-day, 23% rally above $21,000 caused most bearish bets to become worthless. The recent move has holders (or hodlers) calling a market bottom and the potential end to the bear market, but the options market might hold the answer.

Can Bitcoin options help bulls secure the $20,000 floor?

It might seem like a distant reality right now, but Bitcoin was trading below $17,500 just seven days ago. As the weekly options expiry on Jan. 20 approaches, the bullish bets are about to pay off, while bears will see their options becoming worthless as the deadline looms over them.

Bears’ main hope is the possibility of the U.S. Federal Reserve raising interest rates by 50 basis points at the next meeting, but that won’t take place until Feb. 1. The latest data on U.S. retail sales have shown a 1.1% retreat in December, the second consecutive spending cut. The odds are increasingly favorable for a 25 basis point interest rate increase, signaling that the central bank’s effort to curb inflation is achieving its expected results.

If bulls win on Jan. 20, they will likely add buying pressure and fuel the $20,000 support level.

Bitcoin bears were caught entirely off-guard

The open interest for the Jan. 20 options expiry is $580 million, but the actual figure will be lower since bears were decimated after Bitcoin breached $20,000. Bulls are in complete control, even though their payout becomes larger at $21,000 and higher.

*Bitcoin options aggregate open interest for Jan. 20. Source: Coinglass*

The 1.18 call-to-put ratio reflects the imbalance between the $150 million call (buy) open interest and the $125 million put (sell) options. If Bitcoin’s price remains above $17,000 at 8:00 am UTC on Jan. 13, less than $2 million worth of these put (sell) options will be available. This difference happens because the right to sell Bitcoin at $16,500 or $15,500 is useless if BTC trades above that level on expiry.

$21,000 Bitcoin would give bulls a $220 million profit

Below are the three most likely scenarios based on the current price action. The number of options contracts available on Jan. 20 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $19,000 and $20,000: 7,500 calls vs. 1,700 puts. The net result favors the call (bull) instruments by $110 million.
Between $20,000 and $21,000: 800 calls vs. 8,100 puts. The net result favors the call (bull) instruments by $165 million.
Between $21,000 and $22,000: 10,600 calls vs. 200 puts. The net result favors bulls by $220 million.

For example, a trader could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but unfortunately, there’s no easy way to estimate this effect.

Bitcoin bears need to push the price below $20,000 on Friday to minimize the loss. On the other hand, the bulls can double their gains by pumping the price above $21,000 on Jan. 20 and profiting by $220 million.

The 7-day rally toward $21,300 liquidated $1.2 billion worth of leverage short (sell) futures contracts, so they might have less margin required to subdue Bitcoin’s price.

For now, bulls are well positioned to profit from the BTC weekly options expiry and use the proceeds to defend the $20,000 support.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin bears well positioned for Friday’s $2.5 billion options expiry

BTC bears are outnumbered based on open interest volume, but bulls’ hopes of $20,000 before 2023 have already been hampered.

A year-end wager for $80,000 Bitcoin (BTC) might seem entirely off the table now, but not so much back in March as BTC rallied to $48,000. Unfortunately, the two-week 25% gains that culminated with the $48,220 peak on March 28 were followed by a brutal bear market.

It is important to highlight that the U.S. stock market likely has driven those events, as the S&P 500 index peaked at 4,631 on March 29 but traded down 21% to 3,640 by mid-June.

Moreover, that date roughly coincides with the crisis at centralized cryptocurrency lender Celsius, which halted withdrawals on June 12, and the insolvency of venture capital firm Three Arrows Capital on June 15.

While the fear of an economic downturn has undoubtedly triggered the cryptocurrency bear market, the reckless mismanagement of centralized billion-dollar entities is what sparked the liquidations, pushing prices even lower.

To cite a few of those events, TerraUSD/Luna collapsed in mid-May; crypto lender Voyager Digital imploded in early July; and the second-largest exchange and market marker, FTX and Alameda Research, filed for bankruptcy in mid-November.

In addition, the quasi-tragical sequence of events hit unsuspected victims, including publicly-listed mining companies such as Core Scientific, which was forced to file for Chapter 11 bankruptcy on Dec. 21. Despite the bulls’ best efforts, Bitcoin has not been able to post a daily close above $18,000 since Nov. 9.

This movement explains why the $2.47 billion Bitcoin year-end options expiry will likely benefit bears despite being vastly outnumbered by bullish bets.

Most bullish bets targeted $20,000 or higher

Bitcoin broke below $20,000 in early November when the FTX collapse began, taking year-end option traders by surprise.

For instance, a mere 18% of the call (buy) options for the monthly expiry have been placed below $20,000. Thus, bears are better positioned even though they placed fewer bets.

*Bitcoin options aggregate open interest for Dec. 30. Source: CoinGlass*

A broader view using the 1.61 call-to-put ratio largely favors bullish bets because the call (buy) open interest stands at $1.52 billion against the $950 million put (sell) options. Nevertheless, as Bitcoin is down 19% since November, most bullish bets will likely become worthless.

For instance, if Bitcoin’s price remains below $17,000 at 8:00 am UTC on Dec. 30, only $33 million worth of these calls (buy) options will be available. This difference happens because there is no use in the right to buy Bitcoin at $17,000 or $18,000 if it trades below that level on expiry.

Bears could secure a $340 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Dec. 30 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $15,000 and $16,000: 700 calls vs. 22,500 puts. The net result favors bears by $340 million.
Between $16,000 and $17,000: 2,000 calls vs. 16,500 puts. The net result favors bears by $240 million.
Between $17,000 and $18,000: 7,500 calls vs. 13,600 puts. Bears remain in control, profiting $110 million.
Between $18,000 and $19,000: 12,100 calls vs. 11,300 puts. The net result is balanced between bulls and bears.

Bitcoin bulls need to push the price above $18,000 on Dec. 30 to flip the table and avoid a potential $340 million loss. However, that movement seems complicated considering the ongoing pressure for U.S. regulation and fears of insolvency at the biggest exchanges, despite the recent proof-of-reserves effort.

Considering the above, the most probable scenario for the Dec. 30 expiry is the $15,000-to-$17,000 range providing a decent win for bears.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.