The bears intend to keep the Bitcoin price below $43,000 until the expiration of $700 million on Friday


Bitcoin (Bitcoin) Since the strong rejection of USD 53,000 on September 7th, it has been trading in a downward pattern, while $3.4 billion in futures Contract clearing and China’s ban on cryptocurrency trading appear to have severely affected the morale of traders.

Increasing negative sentiment, major cryptocurrency exchanges such as Binance and Huobi Some services in mainland China were stopped, and some of the largest Ethereum mining pools, such as Sparkpool and BeePool, were forced to shut down completely.

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

According to the chart above, it can be understood why buyers bet 80% of their bets at $44,000 or higher. However, the past two weeks have finally caused these call (buy) options to rapidly depreciate.

On September 25, the People’s Bank of China (PBoC) released Encryption is prohibited nationwide And prohibit companies from providing financial transactions and services to market participants. This news triggered an 8% drop in Bitcoin prices and a broader correction of altcoins.

Tesla CEO Elon Musk confirms bearish sentiment He expressed support Discuss cryptocurrency at the Code Conference in California.

Musk said:

“I think it is impossible to destroy cryptocurrency, but the government may slow down its development.”

If we are in a neutral to bullish market, these comments may reverse the negative trend.For example, on July 21, Elon Musk stated that Bitcoin had hit his Renewable Energy BenchmarkAs a result, the price of Bitcoin, which had fallen by 12% in ten days, reversed its trend and rose by 35% in the next ten days.

The expiry date on October 1 will be a test of the strength of the bulls, because any price lower than $42,000 means a massacre of the absolute dominance of put (sell) options.

Bitcoin options aggregates open positions on October 1. Source: Bybt.com

Initially, neutral to bullish instruments worth $285 million dominated 21% of weekly expirations compared to put (sell) options of $320 million.

However, the 1.21 put option ratio is deceptive, because if the Bitcoin price stays below $43,000 at 8:00 AM UTC on Friday, the excessive optimism seen by the bulls may wipe out most of their bets.

After all, if the transaction price of Bitcoin is lower than that price, what are the benefits of buying Bitcoin for $50,000?

The bear was also stunned

66% of put options (the buyer has the right to sell bitcoins at a pre-set price) are priced at $42,000 or less. If Bitcoin goes above that price on Friday morning, these neutral to bearish instruments will become worthless.

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 shows how many contracts will be available on Friday, depending on the expiration price.

  • Between 40,000 USD and 41,000 USD: 110 call options and 4,470 put options. The net result is $175 million in favor of protective bear (bearish) instruments.
  • Between USD 41,000 and USD 43,000: 640 call options and 4,000 put options. The net result continues to favor shorts of US$140 million.
  • Between USD 43,000 and USD 45,000: 1,780 call options and 2,070 put options. The end result is a balance between short and long positions.
  • More than 45,000 USD: 2,530 call options and 1,090 put options. The net result shifted to $65 million in favor of the bulls.

This rough estimate takes into account the call (buy) options used in the call strategy and the put (sell) options specifically used for neutral to put trading. Unfortunately, real life is not that simple, because more complex investment strategies may be being deployed.

For example, a trader could have sold put options, effectively gaining positive exposure to bitcoin above a certain price. Therefore, there is no easy way to estimate this impact, so the simple analysis above is a good guess.

As far as the current situation is concerned, the shorts have absolute control over the expiry date on October 1, and they have good reasons to continue to push the price below $43,000.

Unless there is some unexpected buying pressure in the next 12 hours, the amount of capital required for the bulls to push the market up to the $45,000 threshold seems huge and unreasonable.

On the other hand, a short position requires a 5% negative price fluctuation to keep BTC below $41,000 to increase the lead by $35 million. Therefore, this move also shows that the amount of effort required is almost unrewarded.

The only hope for the bulls lies in some surprisingly positive news flow of Bitcoin prices before 8:00 AM UTC on October 1st. If any wise action must be taken, then it is likely to take place on weekends, when there is less traffic.

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