Bitcoin bulls plan to flip $23K to support by aiming to win this week’s $1B options expiry

Bitcoin's (BTC) terms has been trading supra $22,500 for 12 days. Of course, this concern tin alteration adjacent if Federal Reserve seat Jerome Powell issues affirmative statements astir the system successful today’s post-FOMC presser. 

Even if the determination matches the marketplace consensus, the post-meeting connection should beryllium investors' superior country of focus. Specific areas to absorption connected would beryllium clues for the adjacent gathering successful March.

Troubling quality for the largest stablecoin Tether (USDT), could besides origin a meaningful interaction aft a Celsius bankruptcy examiner report showed that "Tether's vulnerability yet grew to implicit $2 billion" successful Sep. 2021. However, it is unclear if iFinex — Tether’s issuer — suffered immoderate losses. iFinex CTO Paolo Ardoino denied vulnerability to Celsius and suggested that the examiner had "mixed up" prepositions successful the report.

Is a beardown correction successful banal marketplace ahead?

Legendary portfolio manager Michael Burry, known for being 1 of the astir vocal critics of the subprime owe situation successful 2007 to 2008, posted a abbreviated enactment connected Twitter connected Feb. 1, suggesting that investors "sell."

While the connection lacks a supporting thesis, 1 could reason that Burry expects a meaningful correction successful accepted markets. Considering the 40-day correlation betwixt Bitcoin and the S&P 500 scale astatine 75%, the likelihood of a BTC terms retrace go evident.

Consequently, this week's Feb. 3, $1 cardinal BTC options expiry tin spell either mode due to the fact that bears tin inactive flip the tables arsenic the tide presently favors the bulls.

Bitcoin bears were caught wholly off-guard

The unfastened involvement for the Feb. 3 options expiry is $1 billion, but the existent fig volition beryllium little since bears were caught by astonishment aft the 9.6% rally betwixt Jan. 20 and Jan. 21.

Bitcoin options aggregate unfastened involvement for Feb. 3. Source: Coinglass

The 1.61 call-to-put ratio reflects the imbalance betwixt the $640 cardinal telephone (buy) unfastened involvement and the $400 cardinal enactment (sell) options.

If Bitcoin terms remains supra $23,000 astatine 8:00 americium UTC connected Feb. 3, little than $7 cardinal worthy of these enactment (sell) options volition beryllium available. This quality happens due to the fact that the close to merchantability Bitcoin astatine $22,000 oregon $23,000 is useless if BTC trades supra that level connected expiry.

Related: Retail elephantine Pick n Pay to judge Bitcoin successful 1,628 stores crossed South Africa

$23,000 Bitcoin would springiness bulls a $180 cardinal profit

Below are the 3 astir apt scenarios based connected the existent terms action. The fig of options contracts disposable connected Feb.3 for telephone (bull) and enactment (bear) instruments varies, depending connected the expiry price. The imbalance favoring each broadside constitutes the theoretical profit:

• Between $21,000 and $22,000: 2,700 calls vs. 10,700 puts. The nett effect favors the enactment (bear) instruments by $165 million.
• Between $22,000 and $23,000: 4,400 calls vs. 4,200 puts. The nett effect is balanced betwixt telephone and enactment options.
• Between $23,000 and $24,000: 7,800 calls vs. 100 puts. The nett effect favors the telephone (bull) instruments by $180 million.
• Between $24,000 and $25,000: 12,400 calls vs. 0 puts. Bulls widen their gains to $300 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.

For example, a trader could person sold a telephone option, efficaciously gaining antagonistic vulnerability to Bitcoin supra a circumstantial price, but unfortunately, there's nary casual mode to estimation this effect.

In essence, Bitcoin bears request to propulsion the terms beneath $22,000 connected Feb. 3 to flip the tables and unafraid a $165 cardinal profit. But, for now, bulls are good positioned to nett from the BTC play options expiry and usage the proceeds to further support the $23,000 support.

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.