Everybody is talking about a 6-figure Bitcoin (BTC), now that the digital asset has come out of its multimonth downtrend and shown that it is in a bullish direction.
If Bitcoin makes a parabolic jump toward $110,000, it would match PlanB’s Stock to-Flow model prediction. The model’s inaccuracy has been attributed to a number of factors, including the valuation and scarcity of precious metals as well as Elon Musk’s energy FUD in China and China’s crackdown on mining.
Bulls hope that an exchange-traded fund will be approved by the United States Securities and Exchange Commission. There are currently multiple requests that are awaiting review from Oct. 18 to Nov. 1. However, the regulator may delay its final decision.
The Oct. 15 expiry of $830 million options was greatly affected by the 20% price rally that began Oct. 4, which most probably eliminated 92% (sell) options.
Bitcoin prices on Coinbase in USD Source: TradingView
China’s crackdown on mining was a significant event that may have fuelled investor sentiment. Research shows that the U.S. accounts for 35.4% in the Bitcoin hash rate.
Cointelegraph also reported that the U.S. states Texas and Ohio will receive large-scale Bitcoin mining facilities, which will boost the U.S. market share.
Bulls were able to profit from the Oct. 8 expiry
Bulls were more powerful after last week’s estimated $370 million net profit from BTC options expiry. This is evident in Friday’s $820million expiry. This is why the open interest in call (buy) options is 43% higher than neutral-to-bearish options.
Bitcoin options for Oct. 15 aggregate open interest Source: Bybt
The above data shows that bears placed $335,000,000 in bets for Friday’s expiry. However, it seems like they were taken by surprise as 92% (or put) options are likely become worthless.
This means that if Bitcoin is above $56,000 by Oct. 15, then only $36,000,000 worth of neutral-to bearish put options will be activated at Friday’s 8:00 AM UTC expiry.
The bulls have every reason to push BTC prices above $58,000
These are the most likely scenarios for Oct. 15, 2015’s expiry. The theoretical profit is the one that favors either side of an imbalance. The expiry price determines the amount of active call (buy) or put (sell) contracts.
Between $52,000 to $54,000: 3,140 call vs. 2,110 put. The net result favors the call (bull), instruments at $55 million. Between $54,000 and $56,000, there are 3,700 calls vs. 1,240 put. The net result favors the call (bull), instruments. Between $56,000 and $58,000, there are 4,850 calls vs. 680 put. The net result favors the call (bull), instruments at $235 million. Above $58,000: 6,230 calls against 190 puts. Bulls are enjoying $350 million of profit, while the net result is total dominance.
This rough estimate includes call options that are only used in bullish trades and put options for neutral-to-bearish. Investors might use a more complicated strategy, which typically has different expiry dates.
To reduce their losses, bears require a 7% price adjustment
Bulls are in complete control of Friday’s expiry. There are only a few reasons why they should keep the price above $56,000 in every scenario. To avoid losing $235 million or more, bears must make a 7% decrease below $54,000.
However, traders should remember that bull runs are often characterized by sellers exerting a lot of effort to push the price up. This is usually ineffective and costly. Analytics show that call (buy) options have a significant advantage, which will fuel more bullish bets the following week.
Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.