expiry

Bitcoin bulls aim for $25K price on Friday’s $510M options expiry

BTC price has been gaining momentum as it nears $24,000, and this week’s options expiry could help bulls profit $200 million.

Fifty-one days have passed since Bitcoin (BTC) last closed above $24,000, causing even the most bullish trader to question whether a sustainable recovery is feasible. However, despite the lackluster price action, bulls have the upper hand on Friday’s $510 million BTC options expiry.

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

Investors have been reducing their risk exposure as the Federal Reserve raises interest rates and unwinds its record $8.9 trillion balance sheet. As a result, the Bloomberg Commodity Index (BCOM), which measures price changes in crude oil, natural gas, gold, corn and lean hogs, has traded down 9% in the same period.

Traders continue to seek protection via U.S. Treasuries and cash positions as San Francisco Fed president Mary Daly said on Aug. 2 that the central bank’s fight against inflation is “far from done.” With that being said, the tighter monetary impact on inflation, employment levels and the global economy are yet to be seen.

Bearish bets are mostly below $22,000

Bitcoin’s recovery above $22,000 on July 27 took bears by surprise because only 28% of the put (sell) options for Aug. 5 have been placed above such a price level. Meanwhile, Bitcoin bulls may have been fooled by the $24,500 pump on July 30, as 59% of their bets lay above $25,000.

*Bitcoin options aggregate open interest for Aug. 5. Source: CoinGlass*

A broader view using the 1.60 call-to-put ratio shows more bullish bets because the call (buy) open interest stands at $315 million against the $195 million put (sell) options. Nevertheless, as Bitcoin currently sits above $23,000, most bearish bets will likely become worthless.

For instance, if Bitcoin’s price remains above $23,000 at 8:00 am UTC on Aug. 5, only $19 million worth of these put (sell) options will be available. This difference happens because there is no use in a right to sell Bitcoin at $22,000 or $20,000 if it trades above that level on expiry.

Bulls might pocket a $200 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Aug. 5 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 $22,000: 100 calls vs. 3,700 puts. The net result favors bears by $75 million.
Between $22,000 and $24,000: 1,400 calls vs. 1,600 puts. The net result is balanced between call (buy) and put (sell) instruments.
Between $24,000 and $25,000: 3,800 calls vs. 100 puts. The net result favors bulls to $90 million.
Between $25,000 and $26,000: 0 calls vs. 7,900 puts. Bulls extend their gains to $200 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.

Bears have less margin required to suppress Bitcoin price

Bitcoin bulls need to push the price above $24,000 on Aug. 5 to secure a $90 million profit. On the other hand, the bears’ best-case scenario requires pressure below $22,000 to set their gains at $75 million.

However, Bitcoin bears had $140 million leverage short positions liquidated on July 26-27, according to data from Coinglass. Consequently, they have less margin required to push the price lower in the short term.

The most probable scenario is a draw, causing the Bitcoin price to range between $22,000 and $24,000 ahead of the Aug. 5 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.

$1.26B in Ethereum options expire on Friday and bulls are ready to push ETH price higher

Ethereum network developers confirmed September as the date of the upcoming Merge, a move which prompted traders to flip long on ETH.

Ether’s (ETH) 53% rally between July 13 and 18 gave bulls an edge in July’s $1.26 billion monthly options expiry. The move happened as Ethereum developers set a tentative date for the “Merge,” a transition out of the burdensome proof-of-work (PoW) mining mechanism .

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

According to some analysts, by removing the additional ETH issuing used to finance the energy cost required on traditional mining consensus, Ether could finally achieve the “ultra-sound money” status.

On Beacon Chain, the issuance will be around 1,600 ETH per day decreasing the inflation significantly from 13,000 ETH per day on PoW.

Merge sets effects on monetary policies of Ethereum to become Ultrasound money.

(10/15) pic.twitter.com/9hWjhuGpNK

— Akshay Jain (@akshayjain865) July 25, 2022

Whether or not sound monetary policy revolves around constantly changing the issuing and burning rules remains an open question, but there’s no doubt that the Ethereum developers’ video call on July 14 helped to catapult ETH price.

On July 26, a sudden dramatic spike in Ethereum network active addresses raised multiple speculations about whether Ether is targeting its previous all-time high. Analytics firm Santiment reported that the number of 24-hour daily active addresses reached 1.06 million, breaking the previous 718,000 high set back in 2018. Theories such as “Binance doing a maintenance sweep” emerged, but nothing has been confirmed yet.

The main victims of Ether’s impressive 20% recovery on July 27 were leveraged bearish traders (shorts) who faced $335 million in aggregate liquidations at derivatives exchanges, according to data from Coinglass.

Bears placed their bets below $1,600

The open interest for Ether’s July monthly options expiry is $1.27 billion, but the actual figure will be lower since bears were overly-optimistic. These traders got too comfortable after ETH stood below $1,300 between June 13 and 16.

The pump above $1,500 on July 27 surprised bears because only 17% of the put (sell) options for July 29 have been placed above that price level.

*Ether options aggregate open interest for July 29. Source: CoinGlass*

The 1.39 call-to-put ratio shows the dominance of the $730 million call (buy) open interest against the $530 million put (sell) options. Nevertheless, as Ether stands near $1,600, most bearish bets will likely become worthless.

If Ether’s price remains above $1,500 at 8:00 am UTC on July 29, only $80 million put (sell) options will be available. This difference happens because a right to sell Ether at $1,500 or lower is worthless if Ether trades above that level on expiry.

Bulls are comfortable even below $1,600

Below are the four most likely scenarios based on the current price action. The number of options contracts available on July 29 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: 120,400 calls vs. 80,400 puts. The net result favors the call (bull) instruments by $60 million.
Between $1,500 and $1,600: 160,500 calls vs. 55,000 puts. The net result favors bulls by $160 million.
Between $1,600 and $1,700: 187,100 calls vs. 43,400 puts. The net result favors the call (bull) instruments by $230 million.
Between $1,700 and $1,800: 220,800 calls vs. 40,000 puts. Bulls’ advantage increases to $310 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 Ether above a specific price, but unfortunately, there’s no easy way to estimate this effect.

Bears should throw in the towel and focus on the August expiry

Ether bulls need to sustain the price above $1,600 on July 29 to secure a decent $230 million profit. On the other hand, the bears’ best case scenario requires a push below $1,500 to reduce the damage to $60 million.

Considering the brutal $330 million leverage short positions liquidated on July 26 and 27, bears should have less margin to pressure ETH price lower. With this said, bulls are better positioned to continue driving ETH higher after the July 29 monthly options expiry.

Bulls or bears? Both have a fair chance in Friday’s Bitcoin options expiry

BTC bulls aim to secure a $235 million profit from July 22’s BTC options expiry, but a downside move below $22,000 could nix this plan.

Bitcoin (BTC) briefly broke above $24,000 on July 20, but the excitement lasted less than two hours after the resistance level proved more challenging than expected. A positive is that the $24,280 high represents a 28.5% increase from the July 13 swing low at $18,900.

According to Yahoo Finance, on July 19, the Bank of America published its latest fund managers survey, and the headline was “I’m so bearish, I’m bullish.” The report cited investors’ pessimism, expectations of weak corporate earnings and equity allocations being at the lowest level since September 2008.

The 4.6% advance on the tech-heavy Nasdaq Composite Index between July 18 and 20 also provided the necessary hope for bulls to profit from the upcoming July 22 weekly options expiry.

Global macroeconomic tensions eased on July 20 after Russian President Vladimir Putin confirmed plans to reestablish the Nord Stream gas pipeline flow after the current maintenance period. However, in the course of the last few months, data shows that Germany has reduced its reliance on Russian gas from 55% to 35% of its demand.

Bears placed their bets at $21,000 or lower

The open interest for the July 22 options expiry is $540 million, but the actual figure will be lower since bears have been caught by surprise. These traders did not expect a 23% rally from July 13 to Ju20 because their bets targeted $22,000 and lower.

*Bitcoin options aggregate open interest for July 22. Source: CoinGlass*

The 1.09 call-to-put ratio shows the balance between the $280 million call (buy) open interest and the $260 million put (sell) options. Currently, Bitcoin stands near $23,500, meaning most bearish bets will likely become worthless.

If Bitcoin’s price remains above $22,000 at 8:00 am UTC on July 22, only $30 million worth of these put (sell) options will be available. This difference happens because the right to sell Bitcoin at $22,000 is useless if BTC trades above that level on expiry.

Bears aim for $24,000 to secure a $235 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on July 22 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: 900 calls vs. 3,000 puts. The net result favors the put (bear) instruments by $60 million.
Between $21,000 and $22,000: 2,400 calls vs. 3,000 puts. The net result is balanced between bulls and bears.
Between $22,000 and $24,000: 6,600 calls vs. 500 puts. The net result favors the call (bull) instruments by $140 million.
Between $24,000 and $26,000: 9,400 calls vs. 0 puts. Bulls take total control, profiting $235 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 have until Friday to turn things around

Bitcoin bears need to pressure the price below $22,000 on July 22 to avoid a $140 million loss. On the other hand, the bulls’ best-case scenario requires a slight push above $24,000 to maximize their gains.

Bitcoin bears just had $222 million leverage long positions liquidated from July 17 to 20, so they should have less margin required to drive the price higher. In other words, bulls have a head start to sustain BTC above $22,000 ahead of the July 22 options expiry.

Bitcoin derivatives data forecasts sub-$30K BTC price heading into Friday’s $800M options expiry

Bulls placed too much hope on $32,000 flipping to support, an error that is bound to show by Friday’s $800 million BTC options expiry.

Bitcoin (BTC) briefly broke above $32,000 on May 31, but the excitement lasted less than four hours after the resistance level proved to be tougher than expected. The $32,300 level represented a 20% increase from the May 12 swing low at $27,000 and it provided the necessary hope for bulls to buy some $34,000 and higher call options.

The fleeting optimism reverted to a sellers’ market on June 1 after BTC dumped 7.6% in less than six hours and pinned the price below $30,000. The negative move coincided with the United States Federal Reserve starting the process of scaling down its $9 trillion balance sheet.

On June 2, former BitMEX exchange CEO Arthur Hayes argued that the Bitcoin bottom in May could have been a strong signal. Using on-chain data , Hayes predicts strong support at $25,000, given that $69,000 marked this cycle’s all-time high, a 64% drawdown.

Even though analysts might issue rosy price predictions, the threat of regulation continues to cap investor optimism and another blow came on June 2 when the U.S. Commodity Futures Trading Commission (CFTC) filed suit against Gemini Trust Co for alleged misleading statements in 2017 regarding the self-certification evaluation of a Bitcoin futures contract.

On June 7, a bill to ban digital assets as payment was introduced in the Russian parliament. The bill loosely defines digital financial assets as “electronic platforms,” which can be recognized as the subjects of the national payment system and obliged to submit to the central bank registry.

Bulls placed their bets at $32,000 and above

The open interest for the June 10 options expiry is $800 million but the actual figure will be much lower since bulls were overly-optimistic. These traders might have been fooled by the short-lived pump to $32,000 on May 31 because their bets for Friday’s options expiry extend up to $50,000.

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

The 0.94 call-to-put ratio shows the balance between the $390 million call (buy) open interest and the $410 million put (sell) options. Currently, Bitcoin stands near $30,000, meaning most bullish bets are likely to become worthless.

If Bitcoin’s price moves below $30,000 at 8:00 am UTC on June 10, only $20 million worth of these call (buy) options will be available. This difference happens because a right to buy Bitcoin at $30,000 is useless if BTC trades below that level on expiry.

Bears aim for sub-$29,000 to profit $205 million

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

Between $28,000 and $29,000: 50 calls vs. 7,400 puts. The net result favors the put (bear) instruments by $205 million.
Between $29,000 and $30,000: 700 calls vs. 5,500 puts. The net result favors bears by $140 million.
Between $30,000 and $32,000: 3,700 calls vs. 3,400 puts. The net result is balanced between bulls and bears.
Between $32,000 and $33,000: 7,700 calls vs. 750 puts. The net result favors the call (bull) instruments by $220 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.

Bulls will try to pin BTC above $30,000

Bitcoin bulls need to push the price above $30,000 on June 10 to avoid a $140 million loss. On the other hand, the bears’ best case scenario requires a pressure below $29,000 to maximize their gains.

Bitcoin bulls just had $200 million leverage long positions liquidated on June 6, so they should have less margin required to drive the price higher. With this said, bears will undoubtedly try to suppress BTC below $30,000 ahead of the June 10 options expiry.

$32K Bitcoin price could turn the tides in Friday’s $160M BTC options expiry

BTC price lost the momentum that had pushed it to $32,300 on May 31, but this week’s option expiry could help bulls recapture the key price level.

Twenty-three agonizing days have passed since Bitcoin (BTC) last closed above $32,000 and the 10% rally that took place on May 29 and 30 is currently evaporating as BTC price retraces toward $30,000. The move back to $30,000 simply confirms the strong correlation to traditional assets and in the same period, the S&P 500 also retreated 0.6%.

*Bitcoin/USD 12-hour price at Kraken. Source: TradingView*

Weaker corporate profits could pressure the stock market due to rising inflation and the upcoming U.S. Federal Reserve interest rate hikes, according to Citi strategist Jamie Fahy. As reported by Yahoo! Finance, Citi’s research note to clients stated:

“Essentially, despite concerns regarding recession, earnings per share expectations for 2022/2023 have barely changed.”

In short, the investment bank is expecting worsening macroeconomic conditions to reduce corporate profits, and in turn, cause investors to reprice the stock market lower.

According to Jeremy Grantham, co-founder and chief investment strategist of GMO, “We should be in some sort of recession fairly quickly, and profit margins from a real peak have a long way that they can decline.”

As the correlation to the S&P 500 remains incredibly high, Bitcoin investors fear that the potential stock market decline will inevitably lead to a retest of the $28,000 level.

*S&P 500 and Bitcoin/USD 30-day correlation. Source: TradingView*

The correlation metric ranges from a negative 1, meaning select markets move in opposite directions, to positive 1, which reflects a perfect and symmetrical movement. A disparity or a lack of relationship between the two assets would be represented by 0.

Currently, the S&P 500 and Bitcoin 30-day correlation stands at 0.88, which has been the norm for the past couple of months.

Bearish bets are mostly below $31,000

Bitcoin’s recovery above $31,000 on May 30 took bears by surprise because only 20% of the put (sell) options for June 3 have been placed above such a price level.

Bitcoin bulls may have been fooled by the recent $32,000 resistance test and their bets for the $825 million options expiry go all the way to $50,000.

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

A broader view using the 0.77 call-to-put ratio shows more bearish bets because the put (sell) open interest stands at $465 million against the $360 million call (buy) options. Nevertheless, as Bitcoin currently stands above $31,000, most bearish bets will likely become worthless.

If Bitcoin’s price remains above $31,000 at 8:00 am UTC on June 3, only $90 million worth of these put (sell) options will be available. This difference happens because there is no use in a right to sell Bitcoin at $31,000 if it trades above that level on expiry.

Bulls might pocket a $160 million profit

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

Between $29,000 and $30,000: 1,100 calls vs. 5,100 puts. The net result favors bears by $115 million.
Between $30,000 and $32,000: 4,400 calls vs. 4,000 puts. The net result is balanced between call (buy) and put (sell) instruments.
Between $32,000 and $33,000: 6,600 calls vs. 1,600 puts. The net result favors bulls to $160 million.
Between $33,000 and $34,000: 7,600 calls vs. 800 puts. Bulls extend their gains to $225 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.

Bears have less margin required to suppress Bitcoin price

Bitcoin bears need to pressure the price below $30,000 on June 3 to secure a $115 million profit. On the other hand, the bulls’ best case scenario requires a push above $33,000 to increase their gains to $225 million.

However, Bitcoin bears had $289 million leverage short positions liquidated on May 29, according to data from Coinglass. Consequently, they have less margin required to push the price lower in the short term.

With this said, the most probable scenario is a draw, causing Bitcoin price to range near $31,000 ahead of the June 3 options expiry.