Bitcoin (BTC), which has been trying to surpass the $20,500 resistance over the past 35 days, failed on the most recent attempt on Oct. 6. During that time, BTC reached levels below $18,500 on four occasions.
12-hour chart of the Bitcoin/USD price index. Source: TradingView
Investors remain unsure if $18,200 is the bottom, as the support level continues to fall each time it’s tested. Bulls must maintain momentum this week as $510 million worth of options expire.
Because Bitcoin bears can make $80 million if they suppress BTC below $19,000, the Oct. 21 options expiry date is particularly relevant.
Bears bet $19,000 or less
Open interest in the Oct. 21 options expiry date is $510 million. However, the actual number will be lower because bears were too optimistic. The traders placed bearish bets of $17,500 on these options and were unable to win after BTC dropped below $19,000 on October 13.
Bitcoin options open interest aggregated for Oct. 21. Source: CoinGlass
The ratio of 0.77 call-to–put shows that the $290million put (sell) open interests outweighs the $220million call (buy). However, Bitcoin is close to $19,000 so bearish bets are likely to become meaningless.
Only 4% of these put options (sell) will be available if Bitcoin’s price is above $19,000 on October 21st at 8:00 UTC. This is because a right of selling Bitcoin at $18,000 and $19,000 on expiry is worthless.
Bulls still have the ability to flip the tables and make a profit of $150 million.
Based on current price action, here are the top four scenarios. The expiry price will determine the number of Bitcoin options contracts that are available for both call (bull) or put (bear). The theoretical profit is determined by the imbalance in favor of each side.
Between $18,000 to $19,000: 0 calls against 4,300 puts. The net result favors bear (put) instruments by $80million. Between $19,000 and $20,000, 1,500 calls vs. 1,100 put. The net result is balanced between puts and calls. Between $20,000 and $21,000, 4,300 calls vs. 100 put. The net result favors bull call instruments by $85million. Between $21,000 and $22,000, 7,200 calls vs. zero puts. The net result favors call (bull), instruments by $150 millions.
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: Sharp Bitcoin price movement expected as volatility hangs low at record levels and sellers are exhausted
It would be unlikely that there are any more dips below $19,000
To make $80 million, bitcoin bears must push the price down to $19,000. To flip the tables and make a $150 million profit, bulls need a pump of at least $21,000.
Bitcoin bulls had $80million in leveraged long positions that were liquidated on Oct. 12, and Oct. 13. They should have less margin to drive the price higher than necessary. Therefore, bears are more likely to plow BTC below $19,000 before the Oct. 21 weekly options expire.
com. You should do your research before making any investment or trading decision.
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.