Bitcoin Bulls make a net profit of $ 830 million after the options expire

Two or three weeks ago, when Bitcoin (BTC) was trading below $ 52,000, a trader betting at $ 65,000 on October 22nd would be viewed as extremely bullish. The fact that 98% of the put (sell) options on weekly Bitcoin options that expire this Friday were placed below this price proves it.

Fast forward to this week and the successful launch of the first exchange-traded BTC fund (ETF) in the United States and the news that the Digital Currency Group (DCG), the parent company of Grayscale Bitcoin Trust, has increased its limit on GBTC shares Getting worth up to $ 1 billion, which drove the price of Bitcoin to an all-time high.

The $ 40.5 billion investment vehicle has been available for trading in the US markets since March 2015 and recently filed an application with the US Securities and Exchange Commission to convert its GBTC product into an ETF.

The parabolic surge to an all-time high of $ 67,000 on October 20 was also fueled by optimistic remarks from billionaire Carl Icahn. With four decades of sky-high returns, Icahn warned of an impending financial crisis and highlighted Bitcoin’s power as an inflation hedge.

In addition, Vasiliy Shpak, Russia’s Deputy Minister of Industry and Trade, is said to have presented a proposal to use the oil from the country’s oil production for mining cryptocurrencies. The Russian government has tried to cut gas to cut emissions, but is struggling to meet the target due to underdeveloped infrastructure.

While the $ 1.8 billion option expiration this Friday was a big win for the bulls, it wasn’t the same a few weeks ago.

At first glance, $ 1 billion worth of call (buy) options dominate just 23% when expiring on October 22, versus $ 810 million in put (sell) instruments.

The 1.23 call-to-put ratio is a scam, however, as the recent rally is likely to undo most bearish bets if Bitcoin price stays above $ 64,000 at 8 a.m. UTC on Friday. The right to sell Bitcoin for $ 60,000 has no value if it trades above that price.

The cops look pretty comfortable over $ 65,000

Here are the four most likely scenarios for the October 15th expiration date: An imbalance in favor of either party represents a theoretical gain. In other words, the number of active call (buy) and put (sell) contracts will vary Expiry price different:

• From $ 60,000 to $ 62,000: 8,670 calls versus 3,070 bookings. Net income is $ 335 million coping support.
• From $ 62,000 to $ 64,000: 10,780 calls versus 2,100 bookings. The net result is $ 540 million supporting cops.
• From $ 64,000 to $ 66,000: 13,050 calls versus 280 bookings. Net income is $ 830 million coping support.
• Over $ 68,000: 13,680 calls versus 20 bookings. The net result was complete dominance, with the bulls making $ 940 million.

This rough estimate takes into account calls used in bullish bets and only places calls on neutral to bearish trades. However, this oversimplification ignores more complex investment strategies.

For example, a trader could have sold a put, effectively making a positive level for Bitcoin above a certain price. But unfortunately there is no easy way to gauge this effect.

Bears need a 7% price correction to reduce losses

In each of the scenarios drawn above, the bulls have absolute control over the Friday deadline. The positive flow of information this week does not leave investors with much reason to take profits or to accept a price correction prematurely. On the flip side, the bears must plunge 7% below $ 62,000 to avoid a loss of $ 830 million.

Traders need to keep in mind that during rallies, the effort it takes for salespeople to put pressure on prices is enormous and often ineffective. Currently, options market data suggests a significant advantage of call (call) options, leading to more bullish bets for the October 29th monthly expiration.

The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement carries risks. You should do your own research when making a decision.