Bitcoin options data shows bulls aiming for $17K BTC price by Friday’s expiry

Bitcoin (BTC) terms crashed to $15,500 connected Nov. 21, driving the terms to its lowest level successful 2 years. The 2-day-long correction totaled an 8% downtrend and wiped retired $230 cardinal worthy of leverage agelong (buy) futures contracts. 

The terms determination gave the mendacious content to bears that a sub-$15,500 expiry connected the Dec. 9 options expiry was feasible, but those bets are improbable to wage disconnected arsenic the deadline approaches.

Year-to-date, Bitcoin terms is 65% down for 2022, but the starring cryptocurrency remains a apical 30 planetary tradable plus people up of tech giants similar Meta Platforms (META), Samsung (005930.KS), and Coca-Cola (KO).

Investors' main interest is inactive the anticipation of a recession if the U.S. Federal Reserve raises rates for longer than expected. Proof of this comes from Dec. 2 information which showed that 263,000 jobs were created successful November, signaling the Fed’s effort to dilatory the system and bring down ostentation remains a enactment successful progress.

On Dec. 7, Wells Fargo manager Azhar Iqbal wrote successful a note to clients that "all told, fiscal indicators constituent to a recession connected the horizon." Iqbal added, "taken unneurotic with the inverted output curve, markets are intelligibly braced for a recession successful 2023."

Bears were overly pessimistic and volition endure the consequences

The unfastened involvement for the Dec. 9 options expiry is $320 million, but the existent fig volition beryllium little since bears were expecting sub-$15,500 terms levels. These traders became overconfident aft Bitcoin traded beneath $16,000 connected Nov. 22.

Bitcoin options aggregate unfastened involvement for Dec. 9. Source: CoinGlass

The 1.19 call-to-put ratio reflects the imbalance betwixt the $175 cardinal telephone (buy) unfastened involvement and the $145 cardinal enactment (sell) options. Currently, Bitcoin stands astatine $16,900, meaning astir bearish bets volition apt go worthless.

If Bitcoin's terms remains adjacent $17,000 astatine 8:00 americium UTC connected Dec. 9, lone $16 cardinal worthy of these enactment (sell) options volition beryllium available. This quality happens due to the fact that the close to merchantability Bitcoin astatine $16,500 oregon $15,500 is useless if BTC trades supra that level connected expiry.

Bulls purpose for $18k to unafraid a $130 cardinal profit

Below are the 4 astir apt scenarios based connected the existent terms action. The fig of options contracts disposable connected Dec. 9 for telephone (bull) and enactment (bear) instruments varies, depending connected the expiry price. The imbalance favoring each broadside constitutes the theoretical profit:

• Between $15,500 and $16,500: 200 calls vs. 2,100 puts. The nett effect favors the enactment (bear) instruments by $30 million.
• Between $16,500 and $17,000: 1,700 calls vs. 1,500 puts. The nett effect is balanced betwixt bears and bulls.
• Between $17,000 and $18,000: 5,500 calls vs. 100 puts. The nett effect favors the telephone (bull) instruments by $100 million.
• Between $18,000 and $18,500: 7,300 calls vs. 0 puts. Bulls wholly predominate the expiry by profiting $130 million.

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

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

Related: Institutional investors inactive oculus crypto contempt the FTX collapse

Bulls astir apt person little borderline to enactment the price

Bitcoin bulls request to propulsion the terms supra $18,000 connected Friday to unafraid a imaginable $130 cardinal profit. On the different hand, the bears' best-case script requires a flimsy propulsion beneath $16,500 to maximize their gains.

Bitcoin bulls conscionable had $230 cardinal leverage agelong positions liquidated successful 2 days, truthful they mightiness person little borderline required to enactment the price.

Considering the antagonistic unit from accepted markets owed to recession concerns and raising involvement rates, bears volition apt debar a nonaccomplishment by keeping Bitcoin beneath $17,000 connected Dec 9.

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.