Bulls risk losing $ 365 million if the BTC options expire on Friday

Bitcoin (BTC) price movement is not bullish, despite hitting an all-time high of $ 69,000 on November 10th. Some consider the descending channel formed 40 days ago to be the predominant trend and $ 56,000 marks its current resistance.

Such a price drop comes after a review by US regulators, following a report by the President’s Working Group on Financial Markets from 1st Associations.

On November 12, an application for a Bitcoin-backed Exchange Traded Fund (ETF) was denied by the US Securities and Exchange Commission. To justify the rejection, the regulator cited participants’ inability to prevent fraud and market manipulation in Bitcoin trading.

More recently, on November 23, the chairman of the US Senate’s Banking, Housing and Urban Development Committee sent notices to multiple exchanges and stablecoin issuers. Questions about consumer and investor protection in stablecoins suggest that lawmakers may be preparing a hearing on this issue.

However, the cops may have a different opinion on such news as stablecoins are not required for Bitcoin to work. In addition, there is not much the US government can do to stop projects and developers willing to relocate outside of their jurisdiction.

Bitcoin options are mostly bullish on Friday

Despite the 17% retreat in the past 14 days from the all-time high of $ 69,000, Bitcoin Call (buy) options dominate the Friday expiration date.

At first glance, $ 1.9 billion in call (call) options dominated 113% in the weekly expiry versus $ 885 million in the put (sell) instrument. But the odds of 2.13 are a scam as the recent drop is likely to wipe out 90% of bullish bets.

For example, if the price of Bitcoin stays below $ 58,000 at 8:00 a.m. UTC on November 26th, those call (buy) options worth only $ 150 million will be available. The right to buy Bitcoin at $ 60,000 or $ 70,000 has no value if it trades below that price.

Bears can hit $ 365 million under $ 56,000

Here are the four most likely scenarios based on the current price movement. For example, the data shows how many contracts will be available for both buy (call) and sell (sell) instruments on Friday. The imbalance in favor of each side represents the theoretical gain:

• Under $ 56,000: 720 calls versus 7,490 bookings. The net result favors an additional call (put) option of $ 365 million.
• From $ 56,000 to $ 58,000: 2,630 calls versus 4,840 bookings. The net result is $ 125 million in favor of bear instruments (puts).
• From $ 58,000 to $ 60,000: 3,600 calls versus 3,850 bookings. The net result is equilibrium.
• From $ 60,000 to $ 62,000: 6,180 calls versus 2,340 bookings. The net result changed by $ 230 million in favor of the cops.

This rough estimate looks at calls used in bullish bets and put options specifically for neutral to bearish trades. However, a trader could have sold a call that, above a certain price, effectively becomes negative for Bitcoin. There is really no easy way to gauge this effect.

Cops have a double incentive to defend $ 56,000

As the 40-day descending channel shows, the bulls will need to hold the $ 56,000 resistance to avoid further loss of momentum. It should be noted that it took less than two weeks to get Bitcoin from $ 41,500 to $ 56,000 on October 10th.

Additionally, if the bulls manage to push the Bitcoin price past $ 58,000, they will be saved from a potential loss of $ 365 million if the BTC bears gain the upper hand thanks to regulatory headwinds. A drop of just 1.5% from its current $ 56,800 level could give the bears enough confidence to inflict even greater pain.

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 involves risks. You should do your own research when making a decision.