$ 3.2 billion bitcoin options expiring tomorrow could start a new rally

Bitcoin has been trading on a descending channel since it hit a new all-time high (ATH) of $ 67,000 on October 20, just a day after the ProShares Bitcoin Strategy ETF (BITO) was launched on the New York Stock Exchange (NYSE).

However, the bulls have enough momentum to peg Bitcoin price above $ 60,000 tomorrow (Oct. 29) when $ 3.2 billion worth of monthly options expire.

Bitcoin price chart | Source: TradingView

Currently, investors are confused about the Exchange Traded Fund (ETF) approval, even though it hit $ 1 billion in assets under management in 48 hours. Market expectations for these funds were either too high or a 42% gain from October through October 19 was priced in beforehand.

Regulatory uncertainty in the United States was also a key factor in preventing some large institutional investors from participating. In a US Senate committee hearing, Rostin Behnam, acting chairman of the Commodity Futures Trading Commission (CFTC) compared the government agency’s enforcement of crypto space to that of a police officer on duty.

Behnam added:

“The transactions that are currently taking place in the market are a large part of the risk that digital assets pose.”

Bulls are making a potential profit of $ 715 million

Ordinarily, these remarks would have little or no impact on a bull market, which begs the question of whether or not the 13% correction since ATH on October 20th marks the end of a price spike.

Tomorrow will be a strength test for the bears as any prize over $ 58,000 will result in a profit of $ 385 million or more for the bulls.

Bitcoin Options Open Rate Summary for October 29th | Source: Bybt

If you look at the graph above, you can see that call options totaled 1.94 billion.

However, the call-to-put ratio of 1.56 is below average as the bears were unexpectedly dumped and most of their put options will be wiped out if Bitcoin price stays above $ 58,000 by the end of the day).

A put option with an exercise price of $ 55,000 becomes worthless if the price trades above that level.

Bulls comfortably control Bitcoin over $ 58,000

68% of a put representing the right to sell Bitcoin at a preset price was placed at $ 58,000 or less.

Here are the four most likely scenarios considering current prices. In addition, the data shows how many contracts will be available for both put and call options on October 20th.

• From $ 52,000 to $ 55,000: 6,500 buy orders vs. 6,530 sell orders. The net result is a balance between the bulls and the bears.
• From $ 55,000 to $ 58,000: 9,510 buy orders vs. 4,610 sell orders. The net result is a profit of $ 270 million for the cops.
• From $ 58,000 to $ 60,000: 9,900 buy orders vs. 3,490 sell orders. Net results continue to favor the $ 385 million bulls.
• Over $ 60,000: 13,870 buy orders vs. 1,970 sell orders. The net result will bring the bulls a profit of $ 715 million.

As shown above, which side of the imbalance favors the potential theoretical gain on expiry.

This rough estimate takes into account calls that are used in bullish and put strategies specifically for neutral to bearish trades. However, a trader may have sold a put, an effective way to get some level of positivity for Bitcoin above a certain price. Unfortunately, there is no easy way to gauge this effect.

Can the bears push Bitcoin below 55,000?

The bears need a 6% correction from the current price level of $ 58,500 to avoid a loss of $ 270 million. While it might not seem like much at first, traders also need to consider the bullish momentum caused by ETF approval.

Less than 36 hours before the option expires on October 29, the bulls are likely to secure victory by holding Bitcoin above $ 59,000. For the bears, the path below $ 55,000 looks far-fetched, but it is still possible.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Mr. Teacher

According to Cointelegraph

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