Bitcoin bears are at risk of “dying” if the option expires tomorrow and the price remains above $ 50,000

Bitcoin price is up more than 30% in just a week, like the bear’s worst nightmare. Worse, the $ 860 million options contract expires this Friday. After a break of $ 54,000, over 99% of put positions are likely to become worthless.

It can be said that bears are in a dangerous position. Bloomberg’s Crypto Outlook revealed that Bitcoin’s $ 50,000 resistance is about to turn into support. Lead commodities strategist Mike McGlone also cited bullish factors such as increasing acceptance along with dwindling supply on the stock exchanges.

Additionally, Bloomberg noted that traditional financial investors are increasingly concerned as the possibility of US government default rising to a 6-year high. In addition, the one-year credit risk swap or the cost of hedging against late payment has risen from 4 to 27 basis points since mid-September.

Bitcoin price chart 4 hours | Source: TradingView

Another key metric that definitely drives this week’s bull run is Bitcoin’s hashrate. That metric fell sharply in May when China vetoed the use of coal-fired power plants to mine cryptocurrency. Then, in early June, the country decided to ban crypto mining, temporarily closing many miners, which had a big impact on the hashrate.

Bitcoin’s average hashrate over 7 days (TH / s) | Source: Blockchain.com

This week, the bulls took advantage of these favorable conditions and pushed Bitcoin to its highest level since May 12 at $ 55,500. For the $ 860 million options contract to expire on October 8, the bears need a miracle to push the price below $ 50,000 to avoid a deep hole.

Summary of the open contracts of q. contractBitcoin picks for the 8th/10 | Source: Bybt

As the data above shows, bears are betting $ 400 million on the Friday expiration date, but it looks like they got caught by surprise as 99% of put options are likely to become worthless.

In other words, if the price stays above $ 54,000 on Friday, only $ 2.7 million will be activated in neutral to bearish put options on expiry. A bitcoin put option at USD 50,000 will be worthless if BTC trades above that price at 3:00 p.m. (UTC) tomorrow.

OI is pretty even between the bulls and the bears

A call-to-put ratio of 1.16 shows a small range of $ 465 million call options versus $ 400 million put options. Although the advantage is in the bulls’ favor, further analysis is needed as some bets do not seem sensible given the current price level.

Here are the four most likely scenarios for an expiration date on Friday: Spreads for both sides represent a theoretical profit. In other words, depending on the expiry price, the number of buy and sell contracts varies:

From $ 48,000 to $ 50,000: 3,515 calls versus 1,765 puts. Net income was $ 85 million in favor of Call (Bull).

From $ 50,000 to $ 54,000: 6,270 calls versus 735 puts. Net income was $ 290 million in favor of Call (Bull).

– Between $ 54,000 and $ 56,000: 6,930 calls versus 50 puts. The net result was $ 370 million in favor of Call (Bull).

Over $ 56,000: 7,600 calls vs. 0 puts. The net result is that bulls completely dominate with a profit of $ 425 million.

This estimate assumes that calls are only used in bullish positions and that puts are in neutral to bearish trades. However, investors could have used a more complex strategy that often involves many different expiration dates.

Bear in a state of “a thousand pounds drooping hair”

In conclusion, the bulls have absolute control over tomorrow’s expiration date and have enough momentum to keep the price above $ 54,000. On the flip side, bears need a 10% decline below $ 50,000 to avoid a loss of $ 370 million.

However, it must be taken into account that in rallies, as is currently the case with Bitcoin, the sellers’ effort to bring about a long liquidation is enormous and often ineffective. Simply put, if there are no surprises before October 8th, Bitcoin will continue to rise.

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