Bitcoin bulls hope to profit from expiration of $195 million BTC option on Friday

In the past ten days, Bitcoin (Bitcoin) The price repeatedly tested the resistance level of $44,500, which marked a 16% drop from the local high of $53,000 the previous week. According to options market data, even if the US$3.4 billion long futures contract was liquidated on September 7 and BTC fell by 18.7%, it would not be enough to eliminate the bullish optimism.

Coinbase’s Bitcoin price (in U.S. dollars). Source: TradingView

If historical data has any impact on the price of Bitcoin, then Poor performance in September In four of the past five years, BTC traded at $47,110 in August.

Regardless of the price, the adoption rate by institutional investors has been steadily increasing. September 13, Morgan StanleyIt is one of the largest banks in the United States and appointed a chief cryptocurrency analyst for its dedicated cryptocurrency research team.

But the most important positive trigger for a 50% or higher bull market comes from the potential exchange-traded fund (ETF) approval of the U.S. Securities and Exchange Commission (SEC). Fidelity Digital AssetsOn September 8, the investment department of the US$4.2 trillion global fund management company held a private meeting with several SEC officials to discuss the benefits and risks of Bitcoin tradable products.

Fidelity applied for a Bitcoin ETP called Wise Origin Bitcoin Trust in March 2021, but regulators continued to delay the issuance of a final decision. In addition, since then, other companies have filed more than 20 similar applications, but not yet; US Securities and Exchange Commission analysis​​.

Bitcoin Options aggregated the open positions on September 3. Source:

The expiration date of September 17 will be a test of the strength of the shorts, as 88% of the $310 million put (sell) options are below $47,000. Therefore, if BTC’s trading price on September 17 is higher than that price, the neutral to put option open interest will be reduced to a meager $36 million.

A put option is the right to sell bitcoin at a predetermined price on a set expiry date. Therefore, if BTC trades at a price higher than that price at 8:00 AM on September 17th, the US$45,000 put option will become worthless.

The obvious advantage of the bulls is misleading

A broader view also provides some advantages for the bulls, as the total open interest of the call (buy) option instrument is $500 million, which is a 62% lead based on the call options ratio.

However, this data is misleading, as the bulls’ excessive optimism may wipe out most of their bets. For example, if the expiration price of Bitcoin is less than US$47,000, their open positions will be reduced to US$34 million. After all, if the transaction price of Bitcoin is lower than that price, what are the benefits of buying Bitcoin for $52,000?

The following are the four most likely scenarios considering the current price level. The imbalance in favor of either party represents the potential profit at maturity. The data below shows how many contracts will be available on Friday, depending on the expiration price.

  • Between USD 45,000 and USD 46,000: 240 call options and 1,980 put options. The net result is $78 million in favor of protective bearish (bear market) instruments.
  • Between USD 46,000 and USD 48,000: The end result is a balance between short and long positions.
  • Between USD 48,000 and USD 50,000: 3,500 call options and 620 put options. The end result is $143 million in favor of call (call) options.
  • More than 50,000 USD: 4,150 call options and 260 put options. The end result is that bullish instruments completely occupy a dominant position of $195 million.

This rough estimate believes that call (buy) options are only used for bullish strategies, while put (sell) options are used for neutral to put trading. Unfortunately, real life is not that simple, because more complex investment strategies may have been deployed.

Incentives for bulls trying to break $50,000 are in place

Both buyers and sellers will demonstrate their strengths in the hours before the expiration on Friday, and the bears will try to minimize losses by keeping the price below $48,000. On the other hand, if BTC stays above this level, the bulls can control the situation well.

The highest pressure level for shorts is $50,000, and the bulls have great incentives to dominate the weekly expiration and gain a considerable advantage of $195 million.

There is still room for further volatility before Friday, and the bulls seem to be in a better position.

The views and opinions expressed here only represent author It does not necessarily reflect the views of Cointelegraph. Every investment and transaction involves risks. When making a decision, you should conduct your own research.