Bitcoin is pinned below $20K as the macro climate stifles hope for a sustainable BTC bull run

Bitcoin (BTC), which crashed below $19,000 on Sept. 6, drove the price to its lowest point in 80 days. This movement not only erased 32% of gains from July to Aug. 15, but also destroyed $246 million worth leverage long (buy), futures contracts.

The Bitcoin price has fallen for the year, but it is important to compare it with other assets. Petroleum prices are down 23.5% in July. Palantir Technologies has fallen 36.4% over 30 days. Moderna (MRNA), a biotech and pharmaceutical company, has lost 30.4%.

Investors have shifted away from riskier assets due to inflationary pressures and fears of a global recession. This protective movement has seen the U.S. Treasuries 5-year yield reach 3.38%. It is now nearing its highest point in 15 years. Investors are signaling their dismay at the current inflation control measures by demanding a higher premium to hold government debt.

According to data released Sept. 7, China’s exports increased 7.1% in August compared to a year ago, after growing by 18% in July. Germany’s industrial orders data from Sept. 6 revealed a 13.6% decrease in July compared to the previous year. There is little hope of a sustained Bitcoin bull run unless there is some decoupling from traditional market.

The bears were too optimistic

Open interest at the Sept. 9 options expiry date is $410,000,000, but this number will likely be lower because bears were too confident. Because their bets were $18,500 or lower, these traders didn’t expect $18,700 to hold.

September 9, 2018: Bitcoin options total open interest Source: CoinGlass

The ratio of 0.77 call-to–put reflects the difference between the $180million call (buy) and open interest options of $230 million. Bitcoin is currently at $18,900. This means that most bets on both sides will soon become worthless.

These call (buy) options are only available if Bitcoin’s price is below $20,000 on September 9th at 8:00 AM UTC. This is because the right to purchase Bitcoin at $20,000 expires if BTC trades below this level.

Bears set a goal of $18,000 to make $90 million in profits

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 $17,000 to $18,000: 0 calls against 4,300 puts. The bears dominate the market, making $130 million. Between $18,000 and $19,000, there are 0 calls vs. 5,050 put. The net result favors bear (put) instruments by $90million. Between $19,000 and $20,000, 700 calls vs. 1,900 put. The put (bear), instruments are favored by $50 million. Between $20,000 and $21,000, 2,050 calls vs. 2200 puts. The net result is balanced between bears and bulls.

This rough estimate includes the put options in bearish bets as well as the call options in neutral-to bullish trades. This oversimplification ignores complex investment strategies.

A trader might have sold a put option to gain exposure to Bitcoin above a certain price. Unfortunately, it’s not possible to quantify this effect.

Related: Bitcoin price drops to 10-week low in wake of a ‘painful U.S. dollar rally’

Bulls have until September 9th to relieve their pain

To avoid a $130 million loss, bitcoin bulls must push the price to $20,000 on Sept. 9. To maximize their gains, bears need to push the price below $18,000 in the best case scenario.

The $246 million in leverage long positions held by Bitcoin bulls were liquidated in just two days. This means that they may have less room to push the price higher. The bears are able to price BTC below $19,000 before the weekly options expire, in other words.

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

2021's Most Anticipated Growth & Wealth-Building Opportunity

Join Thousands of Early Adopters Just Like You Who Want to Grow Capital and Truly Understand Cryptocurrency Together

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.

Close Bitnami banner