expiry

Bitcoin price volatility expected ahead of Friday’s $430M BTC options expiry

Here is why Bitcoin bears stand to profit from this week’s $430 million BTC options expiry.

Bitcoin (BTC) has been stuck below the $18,600 resistance for the past 19 days and while bears successfully breached the $16,000 support on Nov. 21, the 8% range is pretty narrow for an asset class with 60% annualized volatility.

This gives investors good reason to doubt that BTC price will hold its current gains leading into the $430 million BTC options expiry on Dec. 2.

*Bitcoin/USD price index, 12-hour chart. Source: TradingView*

Investors are still unsure about whether $15,500 was the Bitcoin bottom and the consequences of the FTX and Alameda Research demise continue to emerge. The latest contagion victim was Auros Global, an algorithmic trading and market-making firm, which missed a repayment on a decentralized finance loan.

Regulatory uncertainty also continues to limit Bitcoin’s price ascension, especially after United States Senator Elizabeth Warren reinforced the importance of blocking direct exposure of the insured financial institutions and the “highly speculative activity, highly leveraged, and vulnerable” crypto space.

Considering these risks, it seems essential that bulls defend $17,000 ahead of the Dec. 2 options expiry.

Bears placed most of their bets below $16,500

The open interest for the Dec.2 options expiry is $430 million, but the actual figure will be lower since bears were overly-optimistic. These traders completely missed the mark by placing bearish bets between $12,000 and $15,000 after Bitcoin lost the $16,000 support on Nov. 21.

*Bitcoin options aggregate open interest for Dec. 2. Source: CoinGlass*

The 0.88 call-to-put ratio shows the dominance of the $230 million put (sell) open interest against the $200 million call (buy) options. Nevertheless, as Bitcoin stands near $17,000, most bearish bets will likely become worthless.

If Bitcoin’s price remains above $17,000 at 8:00 am UTC on Dec. 2, only $4 million of these put (sell) options will be available. This difference happens because a right to sell Bitcoin at $16,000 or $17,000 is worthless if BTC trades above that level on expiry.

Bulls still have a slight chance

Below are the four most likely scenarios based on the current price action. The number of Bitcoin options contracts available on Dec. 2 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $15,500 and $16,500: 600 calls vs. 3,100 puts. The net result favors the put (bear) instruments by $40 million.
Between $16,500 and $17,000: 1,700 calls vs. 1,400 puts. The net result is balanced between calls and puts.
Between $17,000 and $18,000: 6,200 calls vs. 100 puts. The net result favors the call (bull) instruments by $110 million.
Between $18,000 and $19,000: 8,600 calls vs. 0 puts. The net result favors the call (bull) instruments by $160 million.

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

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

Pending regulation and contagion risk help to raise investors’ fear

During bear markets, it’s easier to negatively impact Bitcoin price due to the outsized effect negative newsflow has on the crypto market.

For example, Binance exchange moved $2 billion worth of Bitcoin on Nov. 28, triggering concerns in the community.

The transaction raised investors’ eyebrows because Binance CEO Changpeng Zhao had previously declared that it’s bad news when exchanges move large amounts of crypto to prove their wallet address. Consequently, odds are bears will likely be able to push the Bitcoin price below $17,000 and avoid a potential $110 million loss.

More importantly, the bulls’ best-case scenario requires a pump above $18,000 to extend their gains to $160 million — rather improbable considering the lingering regulatory and contagion risks. So, for now, bears seem to have control over Friday’s expiry, despite being overconfident.

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.

Here’s why $16.5K is critical for November’s $1.14B Bitcoin options expiry

BTC bulls were liquidated during the drop to $15,500 on Nov. 21, and more downside could occur if bears profit $245 million during Friday’s expiry.

Bitcoin (BTC) faced a 7.3% drop between Nov. 20-21 as it tested the $15,500 support. While the correction seems small, the movement has caused $230 million in liquidations in futures contracts. Consequently, bulls using leverage came out ill-prepared for the $1.14 billion monthly options expiry on Nov. 25.

Bitcoin investors’ sentiment worsened after Genesis Trading, which is part of the Digital Currency Group (DCG) conglomerate, halted payouts at its crypto lending arm on Nov. 16. More importantly, DCG owns the fund management company Grayscale, which is responsible for the largest institutional Bitcoin investment vehicle, the Grayscale Bitcoin Trust (GBTC).

Additionally, Bitcoin miner Core Scientific has warned of “substantial doubt” about its continued operations over the next 12 months given its financial uncertainty. In its quarterly report filed with the United States Securities and Exchange Commission (SEC) on Nov. 22, the firm reported a net loss of $434.8 million inthe third quarter of 2022.

Meanwhile, New York Attorney General Letitia James addressed a letter to the members of U.S. Congress on Nov. 22 recommending barring the purchase of cryptocurrencies using funds in IRAs and defined contribution plans such as 401(k) and 457 plans.

Despite bulls’ best efforts, Bitcoin has not been able to post a daily close above $17,000 since Nov. 11. This movement explains why the $1.14 billion Bitcoin monthly options expiry on Nov. 25 could benefit bears despite the 6% rally from the $15,500 bottom.

Most bullish bets are above $18,000

Bitcoin’s steep 27.4% correction after failing to break the $21,500 resistance on Nov. 5 surprised bulls because only 17% of the call (buy) options for the monthly expiry have been placed below $18,000. Thus, bears are better positioned even though they placed fewer bets.

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

A broader view using the 1.14 call-to-put ratio shows more bullish bets because the call (buy) open interest stands at $610 million against the $530 million put (sell) options. Nevertheless, as Bitcoin is down 20% in November, most bullish bets will likely become worthless.

For instance, if Bitcoin’s price remains below $17,000 at 8:00 am UTC on Nov. 25, only $53 million worth of these call (buy) options will be available. This difference happens because there is no use in the right to buy Bitcoin above $17,000 if it trades below that level on expiry.

Bears could secure a $245 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Nov. 25 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: 200 calls vs. 16,000 puts. The net result favors bears by $245 million.
Between $16,000 and $17,000: 3,200 calls vs. 11,900 puts. The net result favors bears by $145 million.
Between $17,000 and $18,000: 5,600 calls vs. 8,800 puts. Bears remain in control, profiting $55 million.
Between $18,000 and $18,500: 9,100 calls vs. 6,500 puts. The net result favors bulls by $50 million.

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.

Bitcoin bulls need to push the price above $18,000 on Nov. 25 to flip the tables and avoid a potential $245 million loss. However, Bitcoin bulls recently had $230 million worth of liquidated leveraged long futures positions, so they are less inclined to push the price higher in the short term. With that said, the most probable scenario for Nov. 15 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.

Here’s why $16.5K is critical for November’s $1.14B Bitcoin options expiry

BTC bulls were liquidated during the drop to $15,500 on Nov. 21, and more downside could occur if bears profit $245 million during Friday’s expiry.

Meanwhile, New York Attorney General Letitia James addressed a letter to the members of the U.S. Congress on Nov. 22 recommending barring the purchase of cryptocurrencies using funds in IRAs and defined contribution plans such as 401(k) and 457 plans.

Despite the bulls’ best efforts, Bitcoin has not been able to post a daily close above $17,000 since Nov. 11. This movement explains why the $1.14 billion Bitcoin monthly options expiry on Nov. 25 could benefit bears despite the 6% rally from the $15,500 bottom.

Most bullish bets are above $18,000

Bitcoin’s steep 27.4% correction after failing to break the $21,500 resistance on Nov. 5 surprised bulls because only 17% of the call (buy) options for the monthly expiry have been placed below $18,000. Thus, the bears are better positioned even though they placed fewer bets.

Bears could secure a $245 million profit

Between $15,000 and $16,000: 200 calls vs. 16,000 puts. The net result favors bears by $245 million.
Between $16,000 and $17,000: 3,200 calls vs. 11,900 puts. The net result favors bears by $145 million.
Between $17,000 and $18,000: 5,600 calls vs. 8,800 puts. Bears remain in control, profiting $55 million.
Between $18,000 and $18,500: 9,100 calls vs. 6,500 puts. The net result favors bulls by $50 million.

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

$600M in Bitcoin options expire on Friday, giving bears reason to pin BTC under $16K

Bears are better positioned for Friday’s $600 million BTC options expiry, but bulls can flip the tables if Bitcoin price trades above $18,000.

No one can blame Bitcoin (BTC) bulls for placing bets at $20,000 and higher for the $600 million weekly options expiry on Nov. 18. After all, this level had provided a solid resistance since Oct. 25 and held for almost two weeks.

However, the base scenario changed abruptly on Nov. 8 after a liquidity crisis halted withdrawals on the FTX exchange. The movement surprised traders and over a 48-hour timespan, over $290 million in leverage buyers were liquidated.

The market quickly adjusted to the news, ranging from $15,800 to $17,800 for the past seven days. At the moment, investors are afraid that contagion risks might force other key players to sell their cryptocurrency positions.

FTX held significant deposits from key industry players, so its demise meant other participants would also face substantial losses. For example, BlockFi held a $400 million credit line with FTX US. On Nov. 15, collateralized yield platform SALT disclosed significant losses from the FTX collapse and subsequently halted withdrawals.

Similar events happened at the Japanese cryptocurrency exchange Liquid, increasing the uncertainty level in the entire market.

The Nov. 18 options expiry is especially relevant because Bitcoin bears can secure a $120 million profit by suppressing BTC below $16,500.

Bulls placed their bets at $20,000 and higher

The open interest for the Nov. 18 weekly options expiry is $600 million, but the actual figure will be lower since bulls were overly-optimistic. These traders missed the mark, placing bearish bets at $18,000 and higher, while BTC was dumped following the FTX insolvency.

*Bitcoin options aggregate open interest for Nov. 18. Source: CoinGlass*

The 1.00 call-to-put ratio shows the perfect balance between the $300 million put (sell) open interest and the $300 million call (buy) options. Nevertheless, as Bitcoin stands near $16,500, most bullish bets will become worthless.

If Bitcoin’s price remains below $17,500 at 8:00 am UTC on Oct. 21, only 10% of these call (buy) options will be available. This difference happens because a right to buy Bitcoin at $18,000 or $19,000 is worthless if BTC trades below the expiry price.

Bulls need a pump above $18,000 to come out ahead

Below are the four most likely scenarios based on the current price action. The number of Bitcoin options contracts available on Nov. 18 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $15,500 and $16,500: 400 calls vs. 7,900 puts. The net result favors the put (bear) instruments by $120 million.
Between $16,500 and $17,500: 1,700 calls vs. 6,100 puts. The net result favors the put (bear) instruments by $75 million.
Between $17,500 and $18,000: 2,500 calls vs. 5,000 puts. The net result favors the put (bear) instruments by $45 million.
Between $18,000 and $18,500: 4,500 calls vs. 3,100 puts. The net result favors the call (bull) instruments by $25 million.

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

BTC price dips below $16,000 should not be surprising

Bitcoin bears need to push the price below $16,500 to secure a $120 million profit. The bulls’ best-case scenario requires a 10% pump above $18,000 to flip the tables and score a $25 million gain.

Considering that Bitcoin margin and options instruments show low confidence in regaining the $18,500 support, the most likely outcome for Friday’s expiry favors bears. Bulls might be better served by throwing in the towel and concentrating on the Nov. 25 monthly options expiry.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Here’s why Bitcoin price could tap $21K before Friday’s $510M BTC options expiry

Bears are currently better positioned for this week’s $510 million BTC options expiry, but their overconfidence could give bulls a chance to flip the table.

Bitcoin (BTC) has been trying to break above the $20,500 resistance for the past 35 days, with the latest failed attempt on Oct. 6. Meanwhile, the bears have displayed strength on four different occasions after BTC tested levels below $18,500 during that period.

Investors are still unsure whether $18,200 was really the bottom because the support level weakens each time it is tested. That is why it’s important for the bulls to keep the momentum during this week’s $510 million options expiry.

The Oct. 21 options expiry is especially relevant because the Bitcoin bears can profit $80 million by suppressing BTC below $19,000.

Bears placed their bets at $19,000 and lower

The open interest for the Oct. 21 options expiry is $510 million, but the actual figure will be lower since the bears were overly-optimistic. These traders completely missed the mark, placing bearish bets at $17,500 and lower after BTC dumped below $19,000 on Oct. 13.

*Bitcoin options aggregate open interest for Oct. 21. Source: CoinGlass*

The 0.77 call-to-put ratio shows the dominance of the $290 million put (sell) open interest against the $220 million call (buy) options. Nevertheless, as Bitcoin stands near $19,000, most bearish bets will likely become worthless.

If Bitcoin’s price remains above $19,000 at 8:00 am UTC on Oct. 21, only 4% of these put (sell) options will be available. This difference happens because a right to sell Bitcoin at $18,000 or $19,000 is worthless if BTC trades above that level on expiry.

Bulls can still flip the table and secure a $150 million profit

Below are the four most likely scenarios based on the current price action. The number of Bitcoin options contracts available on Oct. 21 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $18,000 and $19,000: 0 calls vs. 4,300 puts. The net result favors the put (bear) instruments by $80 million.
Between $19,000 and $20,000: 1,500 calls vs. 1,100 puts. The net result is balanced between calls and puts.
Between $20,000 and $21,000: 4,300 calls vs. 100 puts. The net result favors the call (bull) instruments by $85 million.
Between $21,000 and $22,000: 7,200 calls vs. 0 puts. The net result favors the call (bull) instruments by $150 million.

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

A few more dips below $19,000 would not be surprising

Bitcoin bears need to push the price below $19,000 to secure an $80 million profit. On the other hand, the bulls’ best-case scenario requires a pump above $21,000 to flip the tables and score a $150 million gain.

Bitcoin bulls had $80 million in leveraged long positions liquidated on Oct. 12 and Oct. 13, so they should have less margin than is required to drive the price higher. Consequently, bears have higher odds of pinning BTC below $19,000 ahead of the Oct. 21 weekly options expiry.

Bitcoin holds $19K, but volatility expected as Friday’s $2.2B BTC options expiry approaches

Traders expect an uptick in volatility due to the possibility of September’s $2.2 billion options expiry putting pressure on BTC price near a critical support level.

This week, the $20,000 resistance is proving to be stronger than expected and even after Bitcoin (BTC) price rejected this level on Sept. 27, BTC bulls still have reasons not to give up.

According to the four-month-long descending triangle, as long as the $18,500 support holds, Bitcoin price has until late October to determine whether the downtrend will continue.

*Bitcoin/USD 1-day price index. Source: TradingView*

Bitcoin bulls might have been disappointed by the lackluster price performance as BTC has failed multiple times to break above $20,000, but macroeconomic events might trigger a rally sooner than expected.

Some analysts point to the United Kingdom’s unexpected intervention in the bond market as the breaking point of the government’s debt credibility. On Sept. 28, the Bank of England announced that it would begin the temporary purchase of long-dated bonds to calm investors after a sharp yield increase, the highest since 1957.

To justify the intervention, the Bank of England stated, “were dysfunction in this market to continue or worsen, there would be a material risk to U.K. financial stability.” Taking this measure is diametrically the opposite of the promise to sell $85 billion in bond holdings within 12 months. In short, the government’s credibility is being questioned and as a result, investors are demanding much higher returns to hold U.K. debt.

The impact of the government’s efforts to curb inflation are beginning to impair corporate revenues and according to Bloomberg, Apple recently backed off plans to increase production on Sept. 27. Amazon, the world’s biggest retailer, is also estimated to have shuttered plans to open 42 facilities, as per MWPVL International Inc.

That is why the $2.2 billion Bitcoin (BTC) monthly options expiry on Sept. 30 will put a lot of price pressure on the bulls, even though thebears seem slightly better positioned as Bitcoin attempts to hold on to $19,000.

Most of the bullish bets were placed above $21,000

Bitcoin’s rally toward the $22,500 resistance on Sept. 12 gave the bulls the signal to expect a continuation of the uptrend. This becomes evident because only 15% of the call (buy) options for Sept. 30 have been placed at $21,000 or lower. This means Bitcoin bears are better positioned for the expiry of the $2.2 billion in monthly options.

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

A broader view using the 1.49 call-to-put ratio shows a skewed situation with bullish bets (calls) open interest at $1.26 billion versus the $850 million put (sell) options. Nevertheless, as Bitcoin currently stands near $19,000 and bears have a dominant position.

If Bitcoin price remains below $20,000 at 8:00 am UTC on Sept. 30, only $37 million worth of these call (buy) options will be available. This difference happens because there is no use in the right to buy Bitcoin at $20,000 or $21,000 if it trades below that level on expiry.

Bears could pocket a $350 million profit

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

Between $18,000 and $19,000: 500 calls vs. 19,800 puts. The net result favors bears by $350 million.
Between $19,000 and $20,000: 2,000 calls vs. 16,000 puts. The net result favors bearish bets by $270 million.
Between $20,000 and $21,000: 5,900 calls vs. 12,700 puts. The net result favors bears by $135 million.
Between $21,000 and $22,000: 10,100 calls vs. 11,300 puts. The net result is balanced between bulls and bears.

Regulatory pressure could complicate matters for Bitcoin bulls

Bitcoin bulls need to push the price above $21,000 on Sept. 30 to balance the scales and avoid a potential $350 million loss. However, Bitcoin bulls seem out of luck since the U.S. Federal Reserve chairman called for “crypto activities” regulation on Sept. 27, alerting “very significant structural issues around the lack of transparency.”

If bears dominate the September monthly options expiry, that will likely add firepower for further bets on the downside for Bitcoin price. But, at the moment, there is no indication that bulls can turn the tables and avoid the pressure from the four-month-long descending triangle.

Volatility expected as $490M in ETH options expire shortly after the Ethereum Merge

The outcome of the Ethereum Merge will be a primary price drive that dictates whether ETH bears profit from this week’s $490 million options expiry.

Given the current state of the wider crypto market, some traders might be surprised to learn that Ether (ETH) has been trading in an ascending trend for the past 17 days. While the entire cryptocurrency market experienced a 10% decline on Sept. 13, Ether’s price held firm near the $1,570 support level.

*Ether/USD price index. Source: TradingView*

In less than 12 hours, the Ethereum network is scheduled to undergo its largest ever upgrade and the possibility of extreme volatility should not be ignored. The transition to a proof-of-stake network will be a game changer for multiple reasons, including a 98.5% cut in energy use and reduced coin inflation.

During an upgrade, there is always the risk of multiple malfunctions, especially in more complex systems like the Ethereum Virtual Machine processing. Even if the upgrade has been relatively smooth on previous testnet versions, it is impossible to predict the outcome of the decentralized applications and second-layer solutions plugged into Ethereum’s ecosystem.

That is precisely why the $490 million Ether options expiry on Aug. 16 will put a lot of price pressure on both sides, even though bulls seem slightly better positioned as Ether nears $1,600.

Most bearish bets are placed below $1,600

Ether’s failure to break the $2,000 resistance on Aug. 14 and its subsequent plunge to $1,420 on Aug. 29 gave the bears the signal to expect continuation of the downtrend. That becomes evident as only 12% of the put (sell) options for Sept. 16 have been placed above $1,600. Thus, Ether bulls are better positioned for the expiry of $490 million weekly options.

*Ether options aggregate open interest for Sept. 16. Source: CoinGlass*

A broader view using the 1.06 call-to-put ratio shows a relatively balanced situation with bullish bets (calls) open interest at $252 million versus the $238 million put (sell) options. Nevertheless, as Ether currently stands near $1,600, both sides have similar odds of moving the needle.

If Ether price remains below $1,600 at 8:00 am UTC on Sept. 16, only $27 million worth of these call (buy) options will be available. This difference happens because there is no use in the right to buy Ether at $1,600 or $1,700 if it trades below that level on expiry.

Bears could pocket a $100 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Sept. 16 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $1,400 and $1,500: 33,000 calls vs. 2,600 puts. The net result favors bears by $100 million.
Between $1,500 and $1,700: 29,600 calls vs. 29,000 puts. The net result is balanced between bulls and bears.
Between $1,700 and $1,800: 49,200 calls vs. 3,800 puts. The net result favors bulls by $80 million.
Between $1,800 and $1,900: 81,400 calls vs. 700 puts. Bulls increase their gains to $145 million.

Macroeconomic turmoil might have helped ETH bears

Ether bulls need to sustain the price above $1,500 on Sept. 16 to balance the scales and avoid a potential $100 million loss. However, Ether bulls were unlucky on Sept. 12 after the United States stock markets fell by $1.6 trillion on Sept. 13 due to a hotter-than-expected inflation report.

There’s absolutely no way to predict the outcome of Ethereum Merge, let alone its price impact. However, analysis suggests these three indicators should be watched by traders during the Merge event.

One can never guess the consequences of unexpected delays or even the positive impact of a smooth transition because investors could have priced in the Merge in advance, triggering a “sell the news” event. Consequently, both bulls and bears still have a shot on the Sept. 16 weekly options expiry.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Bitcoin is pinned below $20K as the macro climate stifles hope for a sustainable BTC bull run

BTC bulls have a chance to profit from this week’s $410 million options expiry, but the factors pulling down equities markets reduce the chance of Bitcoin changing its trend.

Bitcoin (BTC) crashed below $19,000 on Sept. 6, driving the price to its lowest level in 80 days. The movement not only completely erased the entirety of the 32% gains accrued from July until Aug. 15, it also wiped out $246 million worth of leverage long (buy) futures contracts.

Bitcoin price is down for the year but it’s important to compare its price action against other assets. Oil prices are currently down 23.5% since July, Palantir Technologies (PLTR) has dropped 36.4% in 30 days and Moderna (MRNA), a pharmaceutical and biotechnology company, is down 30.4% in the same period.

Inflationary pressure and fear of a global recession have driven investors away from riskier assets. By seeking shelter in cash positions, mainly in the dollar itself, this protective movement has caused the U.S. Treasuries’ 5-year yield to reach 3.38%, nearing its highest level in 15 years. By demanding a loftier premium to hold government debt, investors are signaling a lack of confidence in the current inflation controls.

Data released on Sept. 7 shows that China’s exports grew 7.1% in August from a year earlier, after increasing by 18% in July. Furthermore, Germany’s industrial orders data on Sept. 6 showed a 13.6% contraction in July versus the previous year. Thus, until there’s some decoupling from traditional markets, there’s not much hope for a sustainable Bitcoin bull run.

Bears were overly optimistic

The open interest for the Sept. 9 options expiry is $410 million, but the actual figure will be lower since bears became too overconfident. These traders were not expecting $18,700 to hold because their bets targeted $18,500 and below.

*Bitcoin options aggregate open interest for Sept. 9. Source: CoinGlass*

The 0.77 call-to-put ratio reflects the imbalance between the $180 million call (buy) open interest and the $230 million put (sell) options. Currently, Bitcoin stands near $18,900, meaning most bets from both sides will likely become worthless.

If Bitcoin’s price remains below $20,000 at 8:00 am UTC on Sept. 9, only $13 million worth of these call (buy) options will be available. This difference happens because the right to buy Bitcoin at $20,000 is useless if BTC trades below that level on expiry.

Bears aim for $18,000 to secure a $90 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Sept. 9 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $17,000 and $18,000: 0 calls vs. 4,300 puts. Bears completely dominate, profiting $130 million.
Between $18,000 and $19,000: 0 calls vs. 5,050 puts. The net result favors the put (bear) instruments by $90 million.
Between $19,000 and $20,000: 700 calls vs. 1,900 puts. The net result favors the put (bear) instruments by $50 million.
Between $20,000 and $21,000: 2,050 calls vs. 2,200 puts. The net result is balanced between bulls and bears.

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

Bulls have until Sept. 9 to ease their pain

Bitcoin bulls need to push the price above $20,000 on Sept. 9 to avoid a potential $130 million loss. On the other hand, the bears’ best-case scenario requires a slight push below $18,000 to maximize their gains.

Bitcoin bulls just had $246 million leverage long positions liquidated in two days, so they might have less margin required to drive the price higher. In other words, bears have a head start to peg BTC below $19,000 ahead of the weekly options expiry.

Here’s why holding $20.8K will be critical in this week’s $1B Bitcoin options expiry

BTC bulls were liquidated in last week’s drop to $20,800, meaning even more downside could occur if this level fails ahead of this week’s $1 billion options expiry.

Bitcoin (BTC) experienced a 16.5% correction between Aug. 15 and Aug. 19 as it tested the $20,800 support. While the drop is startling, in reality, a $4,050 price difference is relatively insignificant, especially when one accounts for Bitcoin’s 72% annualized volatility.

Currently, the S&P 500’s volatility stands at 31%, which is significantly lower, yet the index traded down 9.1% between June 8 and June 13. So, comparatively speaking, the index of major U.S.-listed companies faced a more abrupt movement adjusted for the historical risk metric.

At the start of this week, crypto investors’ sentiment worsened after weaker conditions in Chinese real estate markets forced the central bank to reduce its five-year loan prime rate on Aug. 21. Moreover, a Goldman Sachs investment bank strategist stated that inflationary pressure would force the U.S. Federal Reserve to further tighten the economy, which negatively impacts the S&P 500.

Regardless of the correlation between stocks and Bitcoin, which is currently running at 80/100, investors tend to seek shelter in the U.S. dollar and inflation-protected bonds when they fear a crisis or market crash. This movement is known as a “flight to quality” and tends to add selling pressure on all risk markets, including cryptocurrencies.

Despite the bears’ best efforts, Bitcoin has not been able to break below the $20,800 support. This movement explains why the $1 billion Bitcoin monthly options expiry on Aug. 26 could benefit bulls despite the recent 16.5% loss in 5 days.

Most bullish bets are above $22,000

Bitcoin’s steep correction after failing to break the $25,000 resistance on Aug. 15 surprised bulls because only 12% of the call (buy) options for the monthly expiry have been placed above $22,000. Thus, Bitcoin bears are better positioned even though they placed fewer bets.

*Bitcoin options aggregate open interest for Aug. 26. Source: CoinGlass*

A broader view using the 1.25 call-to-put ratio shows more bullish bets because the call (buy) open interest stands at $560 million against the $450 million put (sell) options. Nevertheless, as Bitcoin currently stands below $22,000, most bullish bets will likely become worthless.

For instance, if Bitcoin’s price remains below $22,000 at 8:00 am UTC on Aug. 26, only $34 million worth of these put (sell) options will be available. This difference happens because there is no use in the right to sell Bitcoin below $22,000 if it trades above that level on expiry.

Bulls could secure a $160 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Aug. 26 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: 1,100 calls vs. 8,200 puts. The net result favors bears by $140 million.
Between $21,000 and $22,000: 1,600 calls vs. 6,350 puts. The net result favors bears by $100 million.
Between $22,000 and $24,000: 5,000 calls vs. 4,700 puts. The net result is balanced between bulls and bears.
Between $24,000 and $25,000: 7,700 calls vs. 1,000 puts. The net result favors bulls by $160 million.

Holding $20,800 is critical, especially after bulls were liquidated in futures market

Bitcoin bulls need to push the price above $22,000 on Aug. 26 to balance the scales and avoid a potential $140 million loss. However, Bitcoin bulls had $210 million worth of leverage long futures positions liquidated on Aug. 18, so they are less inclined to push the price higher in the short term.

With that said, the most probable scenario for Aug. 26 is the $22,000-to-$24,000 range providing a balanced outcome between bulls and bears.

If bears show some strength and BTC loses the critical $20,800 support, the $140 million loss in the monthly expiry will be the least of their problems. In addition, the move would invalidate the previous $20,800 low on July 26, effectively breaking a seven-week-long ascending trend.

Options data shows Bitcoin’s short-term uptrend is at risk if BTC falls below $23K

BTC’s $335 million options expiry has become a death trap for bulls, and increased legal action by the SEC and IRS against crypto companies is adding to the sell pressure.

Bitcoin (BTC) briefly broke above $25,000 on Aug. 15, but the excitement lasted less than an hour and was followed by a 5% retrace in the next five hours. The resistance level proved to be tougher than expected but may have given bulls false hope for the upcoming $335 million weekly options expiry.

Investors’ fleeting optimism reverted to a sellers’ market on Aug. 17 after BTC dumped and tested the $23,300 support. The negative move took place hours before the release of the Federal Open Markets Committee (FOMC) minutes from its July meeting. Investors expect some insights on whether the Federal Reserve will continue raising interest rates.

The negative newsflow accelerated on Aug. 16 after a federal court in the United States authorized the U.S. Internal Revenue Service (IRS) to force cryptocurrency broker SFOX to reveal the transactions and identities of customers who are U.S. taxpayers . The same strategy was used to obtain information from Circle, Coinbase and Kraken between 2018 and 2021.

This movement explains why betting on Bitcoin price above $25,000 on Aug. 19 seemed like a sure thing a couple of days ago, and this would have incentivized bullish bets.

Bears didn’t expect BTC to move above $24,000

The open interest for the Aug. 19 options expiry is $335 million, but the actual figure will be lower since bears were overly-optimistic. These traders might have been fooled by the short-lived dump to $22,700 on Aug. 10 because their bets for Aug’s options expiry extend down to $15,000.

*Bitcoin options aggregate open interest for Aug. 19. Source: Coinglass*

The 1.29 call-to-put ratio shows the difference between the $188 million call (buy) open interest and the $147 million put (sell) options. Currently, Bitcoin stands near $23,300, meaning most bullish bets are likely to become worthless.

If Bitcoin’s price moves below $23,000 at 8:00 am UTC on Aug. 19, only $1 million worth of these call (buy) options will be available. This difference happens because a right to buy Bitcoin at $23,000 is useless if BTC trades below that level on expiry.

There’s still hope for bulls, but $25,000 seems distant

Below are the three most likely scenarios based on the current price action. The number of options contracts available on Aug. 19 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $21,000 and $23,000: 30 calls vs. 2,770 puts. The net result favors the put (bear) instruments by $60 million.
Between $23,000 and $25,000: 940 calls vs. 1,360 puts. The net result is balanced between bulls and bears.
Between $25,000 and $26,000: 3,330 calls vs. 100 puts. The net result favors the call (bull) instruments by $80 million.

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

Bears will try to pin Bitcoin below $23,000

Bitcoin bulls need to push the price above $25,000 on Aug. 19 to profit $80 million. On the other hand, the bears’ best case scenario requires pressure below $23,000 to maximize their gains.

Bitcoin bulls just had $144 million in leveraged futures long positions liquidated on Aug. 16, so they should have less margin to drive the price higher. With this said, bears have the upper hand to suppress BTC below $23,000 ahead of the Aug. 19 options expiry.