Bitcoin speculators are aiming for $ 195 million in profit from the forfeiture of BTC options
Over the past decade, Bitcoin (BTC) price has tested the resistance level of $ 44,500 several times, and that represents a 16% decline from the local high of $ 53,000 last week. According to options market data, even the liquidation of long futures worth $ 3.4 billion was enough.
If historical data has any role to play in the price of Bitcoin, September has shown negative performance in 4 of the last 5 years and BTC ended August trading at $ 47,110.
Regardless of the price, institutional acceptance is steadily increasing. On September 13th, Morgan Stanley, one of the largest banks in the United States, appointed a top cryptanalyst to its dedicated crypto research team.
However, the main positive trigger for a rally of 50% or more was the approval of a potential exchange traded fund (ETF) that has been approved by the SEC. Fidelity Digital Assets, an investment arm of the $ 4.2 trillion global fund manager, held a private meeting with several SEC officials on Sept. 8 to discuss the benefits and risks of a tradable Bitcoin product.
Fidelity filed a Bitcoin ETP called the Wise Origin Bitcoin Trust in March 2021, but the regulator continued to delay its final decision. In addition, more than 20 similar applications have been submitted by other companies and none have been submitted yet; analyzed by the SEC.
The September 17 expiration date will be a test of strength for the bears as 88% of the $ 310 million put (put) options were placed at $ 47,000 or below. If BTC trades above this price on September 17th, the open interest of a neutral to bearish put option would be reduced to a meager $ 36 million.
A put is the right to sell Bitcoin at a set price on a set expiration date. As a result, a $ 45,000 call option will become worthless if BTC trades above such price at 8:00 AM UTC on September 17th.
The cops’ obvious advantage is deceptive
A broader perspective also gives the bulls some edge as the total open interest of the call (call) instrument is $ 500 million, which is 62% at the call rate.
However, this data is misleading as the bulls’ overly optimism could nullify most of their bets. For example, if Bitcoin’s expiry price is below $ 47,000, its open interest drops to $ 34 million. After all, what good is the right to buy Bitcoin for $ 52,000 if it trades below that price?
Here are the four most likely scenarios considering current prices. An imbalance in favor of either party represents a potential gain from the expiration. The following data shows how many contracts will be available based on the expiration price on Friday.
- From $ 45,000 to $ 46,000: 240 calls compared to 1,980 bookings. Net income was $ 78 million in favor of protective (bear) put instruments.
- From $ 46,000 to $ 48,000: The net result is a bear-bull balance.
- From $ 48,000 to $ 50,000: 3,500 calls versus 620 bookings. The net result is $ 143 million in favor of a call option (Bull).
- Over $ 50,000: 4,150 calls versus 260 bookings. The net result was a total domination of $ 195 million from bulls.
This rough estimate looks at call (buy) options used exclusively in bullish strategies and put (sell) options in neutral to bearish trades. Unfortunately, real life is not that simple as more complex investment strategies may have been implemented.
Incentive for cops trying to crack $ 50,000
Both buyers and sellers will show their strength in the hours leading up to the Friday expiration and the bears will seek to minimize losses by keeping the price below $ 48,000. On the other hand, if BTC stays above such a level, the bulls have a good grip on the situation.
The highest stress level for the bears is $ 50,000, with the bulls having significant momentum to dominate the weekly run and gain a $ 195 million advantage.
There is still room for additional volatility ahead of Friday and the bulls appear better positioned.
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