The goal of the short position is to keep the Bitcoin price below 46,000 USD, which will lead to the expiration of the 3B USD BTC option on Friday


The combination of bearish factors this week is enough to make Bitcoin (Bitcoin) The price fell to its lowest level in 46 days, which almost erased 86% of the $2 billion September call (buy) options that expired on September 24.

There are still some surprises, especially considering that the deadline is September 24th at 8:00 UTC. However, the incentive for short positions seems small, as the test of less than $40,000 on September 21 resulted in the liquidation of less than $250 million in futures contracts.

September 22, Evergrande Group After confirming that the interest on domestic bonds will be paid, it eased some concerns about default. Despite this, investors still expect the company to miss the dollar-denominated bonds held mainly by international investors.

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

The recent break of $48,000 on September 18 and September 19 is not enough to break through the resistance of the 20-day moving average. Considering that the peak of fear of China’s debt contagion has passed, the bulls are now pinning their hopes on the “return to the mean” movement.In addition, the chairman of the U.S. Securities Commission (SEC) did not take short-term action Gary Gensler Interviewed in the Washington Post on September 22.

If historical data has any impact on the price of Bitcoin, then Poor performance in September In four of the past five years. If the closing price of BTC in September is lower than the closing price of USD 47,110 on August 31, this bearish trend will continue.

Bitcoin Options aggregated the open positions on September 24. Source: Bybt.com

The monthly expiration date in September will be a strength test for the bulls, as 86% of the $2 million call options (buys) have been placed at $46,000 or higher. Therefore, if BTC trades at a price lower than that price on September 17, the open positions of neutral to put options will be reduced to $285 million.

A call option is the right to buy Bitcoin at a predetermined price on a set expiry date. Therefore, if BTC trades at a price lower than that price at 8:00 AM UTC on September 24, the $50,000 call option will become worthless.

The bulls dominate the BTC price, but they are overconfident

A broader view provides a significant advantage for the bulls, as the total open interest of the call (buy) option instrument is $2 billion, which is 90% of the neutral puts.

However, this data is misleading, as the bulls’ excessive optimism may wipe out most of their bets. Even the smaller $1.05 billion open interest in put (sell) options may be enough to balance these competitive forces.

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 38,000 and USD 40,000: 3,390 call options and 8,695 put options. The net result is $21 million in favor of protective bearish (bearish) instruments.
  • Between 40,000 USD and 46,000 USD: The end result is a balance between short and long positions.
  • Between USD 46,000 and USD 50,000: 11,820 call options and 3,050 put options. The end result is $42 million in favor of call (call) options.
  • More than 50,000 USD: 16,370 calls and 1,400 puts. The bullish instrument will lead by $75 million.

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

There are incentives for shorts to keep BTC below $46,000

Buyers and sellers will do their best within a few hours before expiration on Friday. The shorts will try to minimize losses by keeping the price below $46,000. On the other hand, if BTC stays above this level, the bulls can control the situation well.

Is the $75 million profit sufficient to justify an increase of more than $50,000? Not true, but as mentioned earlier, these are simplified estimates. This mainly depends on the positioning of market makers and arbitrage platforms. This is a game that anyone can guess.

There is still room for further volatility before Friday, but despite the headline of $3 billion, the two sides look equally balanced.

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