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

1 year ago

Bitcoin investors' sentiment improved aft signals pointing to little inflationary unit suggested that the U.S. Federal Reserve could soon determination distant from its involvement complaint summation and quantitative tightening. Commonly known arsenic a pivot, the inclination alteration would payment hazard assets specified arsenic 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 mean FOMO by retail traders. This level is the highest successful much than 6 months, suggesting excessive cryptocurrency buying request has pressured the indicator supra just value.

The all-time precocious connected the 7-day Bitcoin hash complaint — an estimation of processing powerfulness dedicated to mining — besides supported the bullish momentum. The indicator peaked astatine 276.9 exo-hash per 2nd (EH/s) connected Jan. 19, signaling a reversion of the caller weakness caused by miners facing fiscal difficulties.

Despite the bears' champion efforts, Bitcoin has been trading supra $20,000 since Jan. 14 — a question that explains wherefore the $1.48 cardinal Bitcoin monthly options expiry volition vastly payment bulls contempt the caller nonaccomplishment to interruption the $23,200 resistance.

Bulls were excessively optimistic, but stay good positioned

Bitcoin's latest rally connected Jan. 20 caught bears by surprise, arsenic a specified 6% of the enactment (sell) options for the monthly expiry person been placed supra $22,000. Thus, bulls are amended positioned adjacent though they acceptable astir 40% of their telephone (buy) options astatine $23,000 oregon higher.

A broader presumption utilizing the 1.15 call-to-put ratio shows much bullish bets due to the fact that the telephone (buy) unfastened involvement stands astatine $790 cardinal against the $680 cardinal enactment (sell) options. Nevertheless, astir bearish bets volition apt go worthless arsenic Bitcoin is up 36% successful January.

If Bitcoin's terms remains supra $22,000 astatine 8:00 americium UTC connected Jan. 27, lone $38 cardinal worthy of these enactment (sell) options volition beryllium available. This quality happens due to the fact that determination is nary usage successful the close to merchantability Bitcoin astatine $21,000 oregon $22,000 if it trades higher connected expiry.

Bears could unafraid a $595 cardinal profit

Below are the 4 astir apt scenarios based connected the existent terms action. The fig of options contracts disposable connected Jan. 27 for telephone (bull) and enactment (bear) instruments varies, depending connected the expiry price. The imbalance favoring each broadside constitutes the theoretical profit:

Between $20,000 and $21,000: 12,800 calls vs. 7,100 puts. The nett effect favors bulls by $115 million.
Between $21,000 and $22,000: 17,600 calls vs. 2,800 puts. The nett effect favors bulls by $320 million.
Between $22,000 and $23,000: 21,200 calls vs. 1,100 puts. Bulls stay successful control, profiting $455 million.
Between $23,000 and $24,000: 25,300 calls vs. 0 puts. Bulls wholly predominate the expiry, racking up $595 million.

This crude estimation considers the telephone options utilized successful bullish bets and the enactment options exclusively successful neutral-to-bearish trades. Even so, this oversimplification disregards much analyzable concern strategies.

Bitcoin bears request to propulsion the terms beneath $21,000 connected Jan. 27 to greatly trim their losses. However, Bitcoin bears precocious had $335 cardinal worthy of liquidated leveraged abbreviated futures positions, truthful they apt person little borderline required to exert powerfulness successful the abbreviated term.

Consequently, the astir probable script for the January monthly BTC options expiry is the $22,000 oregon higher level, providing a decent triumph for bulls.

Bitcoin (BTC) terms faced fierce absorption astatine $23,000 aft an 11% rally connected Jan. 20, but that was capable to origin $335 cardinal successful liquidations for abbreviated positions utilizing futures contracts. The 36% year-to-date summation to $22,500 caused bears to beryllium ill-prepared for the $1.48 cardinal monthly options expiry connected Jan. 27.

The views, thoughts and opinions expressed present are the authors’ unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.

View source