If the BTC price stays above $50,000, Bitcoin may be trapped-this is the reason


Bitcoin (Bitcoin) With Friday’s $860 million worth of options about to expire, a weekly rebound of 32% has become the worst nightmare for bears.Rear Break through the 54,000 USD level, More than 99% of put bets using put (sell) options may become worthless.

The bears are in a dangerous position, especially as Bloomberg’s cryptocurrency outlook pointed out that Bitcoin’s $50,000 resistance level is about to flip the support level.Senior Commodity Strategist Mike McGron Cited such factors Increasing adoption With a Supply reduction About communication.

Bloomberg also pointed out that after protective measures against the possibility of default by the US government rose to the highest level in six years, the concerns of traditional financial investors surged. In addition, since mid-September, the cost of one-year credit default swaps or payment delay insurance has risen from 4 basis points to 27 basis points.

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

Another key indicator that has certainly contributed to this week’s bull market is Bitcoin’s hash rate, which is the estimated processing power that supports network miners. As China vetoed the use of coal-based energy for the mining of cryptocurrencies, the production capacity was severely hit in May.Then, in early June, the country decided Prohibition of cryptocurrency mining Okay, this temporarily took many miners offline and affected the hash rate.

Bitcoin’s 7-day average hash rate, in terahashes per second. Source: Blockchain.com

This week, the bulls seized these favorable conditions and pushed Bitcoin to its highest level since May 12 at $55,000. As for the $860 million option that will expire on Friday, October 8, shorts need a miracle to push the price below $50,000 to avoid major losses.

Bitcoin options aggregated the open positions on October 8. Source: Bybt

As shown in the above data, the shorts bet $400 million when they expire on Friday, but they seem surprised because 99% of put (sell) options may become worthless.

In other words, if Bitcoin stays above $54,000 on Friday, it will only activate a neutral put option worth $2.7 million at expiration. If the price of Bitcoin is higher than that at 8:00 UTC on Friday morning, the right to sell (put option) Bitcoin at a price of $50,000 will become worthless.

There is a fairly balanced position between long and short positions

The call option ratio of 1.16 represents the subtle difference between a call (buy) option worth $465 million and a put (sell) option worth $400 million. Although beneficial to the bulls, this broader view requires more detailed analysis, because given current prices, some bets are not credible.

Here are the four most likely scenarios for expiration on Friday. The imbalance in favor of either party represents theoretical profit. In other words, depending on the expiration price, the number of active call (buy) and put (sell) contracts will be different:

  • Between USD 48,000 and USD 50,000: 3,515 call options vs. 1,765 put options. The end result is $85 million in favor of bullish (bull market) instruments.
  • Between US$50,000 and US$54,000: 6,270 call options and 735 put options. The net result is $290 million in favor of bullish (bull market) instruments.
  • Between USD 54,000 and USD 56,000: 6,930 call options and 50 put options. The end result is $370 million in favor of bullish (bull market) instruments.
  • More than 56,000 USD: 7,600 call options and 0 put options. The end result is that the bulls are fully dominant, with a profit of $425 million.

The original estimate believed that call options were only used for call bets, and put options were used for neutral to put transactions. However, investors may have used more complex strategies, often involving different maturity dates.

The bear was destroyed in one way or another

All in all, the bulls have absolute control over the expiry date on Friday and have enough motivation to keep the price above $54,000. On the other hand, short positions need to fall 10% below $50,000 to avoid a loss of $370 million.

However, one must take into account that during a bull market, just like a Bitcoin today, the effort required by sellers to liquidate longs is enormous and often ineffective. In short, if there are no surprises before October 8, Bitcoin should continue to rise to higher prices.

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