Bitcoin derivatives data suggests bears will pin BTC below $21K leading in Friday’s options expiry

BTC traders prefer a sharp price correction followed by a recovery to suffering for months below $24,000. BTC has been struggling to overcome the $22,000 resistance since June 14. BTC will not post a daily close of above $24,000 until traders have stopped being bullish.

Investors’ views on digital assets are influenced by events outside the crypto market. On July 14, Janet Yellen, the United States Treasury Secretary, warned that inflation is “unacceptably” high and reiterated her support for the Federal Reserve’s efforts. When asked about the economic impact of rising interest rates, Yellen acknowledged the danger of a recession.

JPMorgan Chase also reported a 28% drop in profits over the year before, despite maintaining stable revenues. This is mainly due to a $1.1billion provision for credit losses due to a “modest decline” in the economy’s outlook.

Bitcoin’s correlation with the S&P 500 is still incredibly high. Investors fear that a global financial crisis will inevitably result in a retest at the $17,600 level from June 18.

S&P 500 and Bitcoin/USD 30-day correlation. Source: TradingView

Correlation metric can range from a negative 1 to indicate that certain markets move in opposite directions to a positive 1. This indicates a perfectly symmetrical and perfect movement. The metric 0. would indicate a relationship or disparity between the assets.

The current 30-day correlation between the S&P 500 & Bitcoin is 0.87. This has been the norm over the past four months.

Bullish bets typically exceed $21,000

Bulls were surprised that Bitcoin failed to surpass $22,000 on July 8. Only 2% of July 15’s call (buy) options had been placed below $20,000. Bitcoin bears are now slightly better placed for the expiry of the $250 million weekly options.

Bitcoin options have an aggregated open interest of July 15. Source: CoinGlass

The 1.15 call/put ratio gives a wider view of bullish bets. This is because the open interest for call (buy) stands at $134million and the put (sell) options at $116 million. However, Bitcoin is currently below $21,000 so most bullish bets are likely to become meaningless.

These calls (buy) will not be available if Bitcoin’s price is below $21,000 on July 15 at 8:00 UTC. This is because the right to purchase Bitcoin at $21,000 on expiry will not be available.

Bears could make $100 million in profit

Based on current price action, the following are the most likely scenarios. The expiry price will determine the number of options contracts that are available for call (bull) or put (bear), depending on which instrument is being traded. The theoretical profit is the result of an imbalance in favor of each side.

Between $18,000 to $19,000: 10 calls against 5,200 puts. The net result favors bears with $100 million. Between $19,000 and $20,000, 200 calls vs. 3.400 puts. The net result gives bears $60 million more. The net result is balanced between bears and bulls.

This rough estimate includes the bullish options and neutral-to bearish options. This oversimplification ignores complex investment strategies.

Related: Bitcoin fights a key trendline close to $20K as the US dollar index reaches new 20-year high

Futures markets indicate bears are better placed

To make a $100 million profit, bitcoin bears must keep the price below $19,000 by July 15. To balance the scales, however, the bulls need to push the price above $20,000 in the best-case scenario.

Professional traders are not interested in Bitcoin CME futures, which suggests that bulls are less likely to push the price higher short-term.

Despite this, bears are the most likely scenario. To secure the Bitcoin price, you must trade at least $21,000 before the July 15 expiry.

Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.

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Eileen Wilson

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 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.

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