Victory is for the taking in Friday’s $950M Bitcoin options expiry

The Bitcoin (BTC), price is down this week. Naturally, bears will always look for a reversal signal when the price gains strength such as Nov. 28’s 8% gain. Technical analysis isn’t a science. Therefore, traders often look at multiple time frames to find the narrative that suits them best.

BTC is currently in a downward channel that began on Oct. 31 and could fall to $50,000 if this pattern continues.

Price of Bitcoin/USD on FTX. Source: TradingView

After concerns over a new COVID-19 version sparked a sell-off in global markets, cryptocurrency markets crashed on November 26. Bears realized a potential $215 million profit when Friday’s options expired. However, that changed after Bitcoin price recovered the $57,000 support.

The market continues to be affected by regulatory concerns from the United States. The U.S. Senate Banking Committee chair requested information from stablecoin exchangers and issuers on Nov. 24.

The President’s Working Group on Financial Markets published a report in November suggesting that U.S. stablecoin issues should be subject to an “appropriate federal oversight” similar as banks’ legislation.

Bitcoin bears will likely make $80 million profit on Dec. 3, due to the possibility of government interference and other negative short-term consequences.

Bitcoin options for Dec. 3 aggregate open interest Source:

The $460 million call (buy), options look almost identical to the $485 million put(sell) instruments. However, the 0.96 call/put ratio is misleading because of the 17% drop in price from $69,000, which will likely wipe out most bullish bets.

If Bitcoin’s price falls below $57,000 on Friday at 8:00 AM UTC, then only $24,000,000 worth of call (buy) options will remain available at expiry. If Bitcoin is trading below $60,000, the right to purchase Bitcoin is worthless.

Bitcoin is below $57,000 for bears

Below are the most likely scenarios that the Dec. 3 options expire for $950 million. The theoretical profit is the ratio of each side to the other. The expiry price determines the amount of active call (buy) or put (sell) contracts.

Between $54,000 to $56,000: 290 calls against 3,480 puts. The net result favors the put (bear), options. Between $56,000 and $58,000, 750 calls vs. 2160 puts. The net result favors the put (bear), instruments. Between $58,000 and $60,000, 1,510 calls vs. 1,040 lets. The net result favors the call (bull), options. Above $60,000: 2,760 calling vs. 860 putting. The net result favors the call (bull), instruments by $115 million.

This rough estimate includes call options used in bullish bets, and put options only in neutral-to bearish trades. This simplifies investment strategies that are more complicated.

A trader might have sold a put option to gain exposure to Bitcoin (BTC), above a certain price. Unfortunately, it’s not possible to accurately estimate the effect.

To balance the scales, bulls require $58,000 or more

Bulls can avoid losing on Dec. 3, if they push Bitcoin’s price to $58,000. This is only 2% off the current $56,900. If the current negative sentiment prevails, bears can exert pressure and attempt to make $175 million profit.

Options markets data favor the sell (or put) option at present, creating potential for surprise market crashes and additional FUD.

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.

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

Close Bitnami banner