$ 1.1 billion worth of bitcoin options expire on Friday, but data points below that

The BTC bulls are facing a $ 300 million loss after last week’s 11.5% correction saw them lose out under $ 1.1 billion worth of options on Wednesday the sixth. has expired.

Market analysis

Bitcoin (BTC) bulls are still licking their wounds after the bloody correction on December 4th that saw the price drop from $ 57,000 to $ 42,000. That 26.5% decline resulted in $ 850 million worth of long-term BTC futures being liquidated, but more importantly, it left the Fear and Greed Index to its lowest level since July 21st brought.

It’s strange to compare the two events as a low below $ 30,000 on July 21 will wipe out any gains in 2021. Compare that to the S&P 500, which is up 21% in 2021, and WTI oil prices, which are up 41%.

The bulls can focus on Bitcoin reserves held on the exchanges, which continue to decline and are currently at a 3-year low. According to data from CryptoQuant, less than 2.27 million BTC are currently deposited on exchanges and there is less money available for trading signals that investors are reluctant to sell in the short term. This is a driving force that many investors consider bullish.

Even with a clear balance between call (buy) and put (sell) options on Friday, the expiration date of $ 1.1 billion, the bears are better positioned after Bitcoin stabilized just above $ 50,000.

A broader look at the order rate reveals a modest 7% advantage for Bitcoin bulls as call (buy) instruments worth 555 million, but the 1.07 indicator is a scam as the 11.5% price drop has rendered most bullish bets worthless in the past week.

For example, if the price of Bitcoin was still below $ 52,000 at 8 a.m. UTC on December 10, then only those $ 50 million worth of call (buy) options would be available. This effect occurs because the right to buy Bitcoin at $ 55,000 has no value if it trades below that price.

The numbers show that the bulls will suffer huge losses

Here are the three most likely scenarios based on the current price trend. The number of options contracts for bears (calls) and bears (puts) available on December 10th will vary depending on the BTC expiry price. An imbalance in favor of both represents a theoretical gain:

• From $ 47,000 to $ 50,000: 400 calls versus 6,600 bookings. Net income is $ 300 million in favor of deal instruments (bears).
• From $ 50,000 to $ 54,000: 1,700 calls versus 4,700 bookings. The net result is $ 160 million in favor of put instruments (bears).
• Over $ 54,000: 2,400 calls versus 2,900 bookings. The net result favors the call option (Bear) by an additional $ 30 million.

This rough estimate takes into account calls used in bullish bets and put options for neutral to bearish trades only. However, this simplification does not take into account more complex investment strategies.

For example, a merchant might have sold a call that, above a certain price, effectively becomes negative for Bitcoin. But unfortunately there is no easy way to gauge this effect.

Bears will do their best to keep BTC below $ 50,000

Bitcoin bears need a gentle push below $ 50,000 to make a profit of $ 300 million. On the flip side, the bulls need price to rebound 7.2% from the current $ 50,500 in order to cut losses in half.

With $ 2 billion of leveraged longs liquidated on December 4th, the bulls are likely trying to stay afloat and not wanting to add risk right now. It would be unnecessarily efficient for bullish investors to waste their efforts to rescue this short-term loss.

In this case, the bears seem to have the upper hand as the options expire on a weekly basis.

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.