Connect with us

Cryptocurrency News

Bitcoin bulls need to reclaim $41K ahead of Friday’s $615M BTC options expiry

Bitcoin bulls need to reclaim $41K ahead of Friday’s $615M BTC options expiry

Over the past three months, Bitcoin’s (BTC) daily closing price fluctuated between $35,050 and $47,550, which is a 35.7% range. Although it might seem excessive, this is not unusual, especially considering BTC’s 68% historical annualized volatility. 

Bitcoin/USD 1-day chart at Coinbase. Source: TradingView

The relief rally that came after the April 11 dip below $40,000 followed the U.S. Consumer Price Index (CPI) report that announced 8.5% for March, the highest since 1981. Meanwhile, in the United Kingdom, the CPI jumped to 7%, a 30-year high.

For these reasons, cryptocurrency traders are increasingly concerned about the ability of the U.S. Federal Reserve rate hikes expected throughout 2022 to contain inflationary pressure. If the global economies enter a recession, investors will likely move away from risk-on asset classes like cryptocurrencies.

Moreover, the Bitcoin price correction was costly to leverage traders because the aggregate liquidations reached $428 million at derivatives exchanges.

Bulls placed their bets at $50,000 and above

The open interest for the April 15 options expiry in Bitcoin is $615 million, but the actual figure will be much lower since bulls were overly-optimistic. These traders might have been fooled by the short-lived pump to $48,000 on March 28 because their bets for April 15’s options expiry extend beyond $50,000.

Bitcoin’s recent downturn below $41,000 took bulls by surprise and only 18% of the call (buy) options for April 15 have been placed below that price level.

Bitcoin options aggregate open interest for April 15. Source: CoinGlass

The 1.21 call-to-put ratio shows the dominance of the $335 million call (buy) open interest against the $280 million put (sell) options. Nevertheless, as Bitcoin stands near $41,000, most bullish bets are likely to become worthless.

If Bitcoin’s price remains below $42,000 at 8:00 am UTC on April 15, only $62 million worth of these call options will be available. This difference happens because a right to buy Bitcoin at $42,000 is worthless if BTC trades below that level on expiry.

Bulls aim for $43,000 to balance the scales

Below are the four most likely scenarios based on the current price action. The number of options contracts available on April 15 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $39,000 and $41,000: 950 calls vs. 5,400 puts. The net result favors the put (bear) instruments by $180 million.Between $41,000 and $42,000: 1,500 calls vs. 3,950 puts. The net result favors bears by $100 million.Between $42,000 and $43,000: 1,850 calls vs. 3,300 puts. The net result favors the put (bear) instruments by $60 million.Between $43,000 and $45,000: 2,700 calls vs. 2,800 puts. The net result is balanced between call (buy) and put (sell) options.

This crude estimate considers the put options used in bearish bets and the call options exclusively in neutral-to-bullish trades. Even so, this oversimplification disregards more complex investment strategies.

For example, a trader could have sold a put option, effectively gaining positive exposure to Bitcoin above a specific price, but unfortunately, there’s no easy way to estimate this effect.

Related: Mark Yusko explains the real problem with Fed policy — and why Bitcoin matters.

Bears will try to pin BTC below $41,000

Bitcoin bears need to pressure the price below $41,000 on April 15 to secure a $180 million profit. On the other hand, the bulls’ best case scenario requires a push above $43,000 to neutralize any impact.

Bitcoin bulls had $180 million leverage long positions liquidated on April 10 and April 11, so they should have less margin than is required to drive the price higher. With this said, bears will undoubtedly try to suppress BTC below $41,000 ahead of the April 15 options expiry.

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



Content link

Splinterlands Decentralizes, SPS Validator Software Goes Open Source
NFT News10 months ago

Splinterlands Decentralizes, SPS Validator Software Goes Open Source

Rent-to-Own Homes Are Back With a Fintech Facelift,
Forex News10 months ago

Rent-to-Own Homes Are Back With a Fintech Facelift,

RNC withdraws from ‘biased’ Commission on Presidential Debates
Stock Markets News10 months ago

RNC withdraws from ‘biased’ Commission on Presidential Debates

Rent Prices Drop in San Francisco, Chicago During Pandemic
Finance News10 months ago

Rent Prices Drop in San Francisco, Chicago During Pandemic

Splinterlands Moves to Decentralize Validator Nodes with License Offering
NFT News10 months ago

Splinterlands Moves to Decentralize Validator Nodes with License Offering

How Much Should I Have in My 401(k) at 50?
Forex News10 months ago

How Much Should I Have in My 401(k) at 50?

Opinion: Twitter's board owes it to shareholders to accept Elon Musk's offer
Stock Markets News10 months ago

Opinion: Twitter’s board owes it to shareholders to accept Elon Musk’s offer

Elon Musk 'profited $150 million against the backs of common shareholders,' lawyer says
Finance News10 months ago

‘No board in America is going to take that number’

'The weight of this debt is crushing': I'm 74, and a retired speech-language pathologist with a student-loan debt of $200K. Am I obliged to pay it off?
Forex News10 months ago

‘Please help!’ It seems like I have been paying my child’s student loan forever. How much longer must I pay it off?

Wikipedia Community Pushes Back Against Crypto Donations
NFT News10 months ago

Wikipedia Community Pushes Back Against Crypto Donations

Twitter stock could crash 20% if board rejects Elon Musk's offer: analyst
Forex News10 months ago

Twitter stock could crash 20% if board rejects Elon Musk’s offer: analyst

Elon Musk’s Twitter bid may tempt retail investors to 'buy the rumor, sell the news' — Here's what financial advisers suggest instead
Stock Markets News10 months ago

Elon Musk’s Twitter bid may tempt retail investors to ‘buy the rumor, sell the news’ — Here’s what financial advisers suggest instead

Twitter Weighs Poison Pill to Prevent Musk From Increasing
Stake Significantly
Finance News10 months ago

Twitter Weighs Poison Pill to Prevent Musk From Increasing Stake Significantly

Here’s why Chiliz (CHZ) multi-team NFL partnership and Web3 expansion plan could be bullish
Cryptocurrency News10 months ago

Here’s why Chiliz (CHZ) multi-team NFL partnership and Web3 expansion plan could be bullish

Traders Move ETH out of Centralized Exchanges and into DeFi
NFT News10 months ago

Traders Move ETH out of Centralized Exchanges and into DeFi

North Korean Lazarus Group allegedly behind Ronin Bridge hack
Cryptocurrency News10 months ago

North Korean Lazarus Group allegedly behind Ronin Bridge hack

How Blockchain Bridges Became Hackers’ Prime Targets
NFT News10 months ago

How Blockchain Bridges Became Hackers’ Prime Targets

Elon Musk makes $43 billion cash takeover offer for Twitter By Reuters
Stock Markets News10 months ago

With Twitter in his sights, Musk creates new model of 21st century billionaire By Reuters

Archie Comics and Palm NFT Studio want fans to co-create the comic’s future series
Cryptocurrency News10 months ago

Archie Comics and Palm NFT Studio want fans to co-create the comic’s future series

how Hackatao is changing the face of PFPs – SuperRare Editorial
NFT News10 months ago

how Hackatao is changing the face of PFPs – SuperRare Editorial

Copyright 2020-2022 © All rights Reserved. CAK Strategic Consulting, LI.