Bitcoin creeps toward $30K, but data shows bears in favor for Friday’s $1.8B BTC options expiry

Bitcoin (BTC) terms has been incapable to adjacent supra $32,000 for the past 15 days and is presently down 37% year-to-date. Although that mightiness look excessive, it does not basal retired among immoderate of the largest U.S.-listed tech companies which person besides sustained notable losses recently. 

In this aforesaid 15-day period, Shopify Inc. (SHOP) banal dropped 76%, Snap Inc. (SNAP) crashed 73%, Netflix (NFLX) is down 70% and Cloudflare (NET) presented a antagonistic 62% performance.

Cryptocurrency investors should beryllium little acrophobic astir the existent "bear market" considering Bitcoin's 79% annualized volatility. However, that is intelligibly not the case, due to the fact that Bitcoin's "Fear and Greed Index" reached an 8 retired of 100 connected May 17, the lowest level since March 2020.

Traders fearfulness that worsening macroeconomic conditions could origin investors to question structure successful the U.S. dollar and Treasuries. Japan’s concern accumulation information released connected May 18 showed a 1.7% contraction twelvemonth implicit year. Moreover, May 20 retail income information from the United Kingdom showed a 4.9% diminution versus 2021.

Financial analysts crossed the globe blasted the weakened marketplace conditions connected the U.S. Federal Reserve's dilatory reaction to the ostentation surge. Thus, traders progressively question structure extracurricular of riskier assets, which negatively impacts Bitcoin price.

Bulls placed astir bets supra $40,000

The unfastened involvement for the monthly May 27 options expiry successful Bitcoin is $1.81 billion, but the existent fig volition beryllium little since bulls were caught by astonishment arsenic the BTC terms has fallen 26% successful the past 30 days.

Bitcoin options aggregate unfastened involvement for May 27. Source: CoinGlass

The 1.31 call-to-put ratio reflects the $1.03 cardinal telephone (buy) unfastened involvement against the $785 cardinal enactment (sell) options. Nevertheless, 94% of the bullish bets volition apt go worthless arsenic Bitcoin presently trades adjacent $30,000.

If Bitcoin's terms remains beneath $31,000 connected May 27, bulls volition lone person $60 cardinal worthy of these telephone (buy) options available. This quality happens due to the fact that determination is nary usage successful a close to bargain Bitcoin astatine $31,000 if it trades beneath that level connected expiry.

Related: Low ostentation oregon bust: Analysts accidental the Fed has nary prime but to proceed raising rates

Bears tin unafraid a $390 cardinal nett connected May 27

Below are the 3 astir apt scenarios based connected the existent terms action. The fig of options contracts disposable connected May 27 for telephone (buy) and enactment (sell) instruments varies, depending connected the expiry price. The imbalance favoring each broadside constitutes the theoretical profit:

• Between $28,000 and $30,000: 800 calls (buy) vs. 14,200 puts (sell). The nett effect favors bears by $390 million.
• Between $30,000 and $32,000: 2,050 calls (buy) vs. 11,200 puts (sell). Bears person a $250 cardinal advantage.
• Between $32,000 and $33,000: 5,650 calls (buy) vs. 9,150 puts (sell). The nett effect favors bears by $110 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.

Bitcoin bears request to prolong the terms beneath $30,000 connected May 27 to nett $390 cardinal from the monthly options expiry. On the different hand, bulls tin trim their nonaccomplishment by pushing BTC supra $32,000, an 8% rally from the existent $29,700 price. However, judging by the bearish macroeconomic conditions, bears look amended positioned for May 27 expiry.

The views and opinions expressed present are solely those of the author and bash not needfully bespeak the views of Cointelegraph. Every concern and trading determination involves risk. You should behaviour your ain probe erstwhile making a decision.