Why Bitcoin bears are trying to keep the BTC price below $62,000 before the option expires on Friday


Bitcoin (Bitcoin) The year-to-date 90% of the income is mainly due to the recent exchange-traded fund (ETF) approval of the U.S. Securities and Exchange Commission (SEC) and ProShares’ Bitcoin strategy ETF (BITO) that can be accumulated within the first 48 hours of listing $1.1 billion in assets Under management.

On November 1, the U.S. Treasury Department released a report on stablecoins, basically Urge Congress to regulate the industryIn short, the working group hopes that government agencies require stablecoin issuers to meet the same standards as depository institutions.

Although the impact of potential stablecoin regulation on the cryptocurrency market is still unknown, stablecoins are essential for exchanges, market makers and retail investors when seeking protection. Nonetheless, investors must still consider that stablecoin issuers may react by simply moving their business outside the jurisdiction of the United States.

Less than 12 hours before the expiration of the $1.15 billion option on Friday, Bitcoin was trading in a downward channel and facing resistance levels of $62,000 to $63,000.

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

ETF expectations may be the cause of excessive bullish optimism, which can be seen from the $68,000 and higher bets that expire on November 5. Even with $740 million in call (buy) options, the bulls may have missed the opportunity to make some related profits.

Bitcoin Options aggregates open positions on November 5. Source: Bybt

At first glance, compared with 6,146 BTC put (sell) instruments, 11,215 BTC call (buy) options dominate 82% of the weekly expiration dates. Despite this, the 1.82 put option ratio is still deceptive, as some of its prices now seem a bit far-fetched.

For example, if the price of Bitcoin stays above $60,000 at 8:00 AM UTC on November 5th, then only $70 million of put (sell) options worth $405 million will be available at expiration. If the transaction price of Bitcoin is higher than that price, there is no value in the right to sell Bitcoin for $55,000.

Bears need less than $62,000 to balance their weight

The following are the four most likely scenarios for the $1.15 billion due on November 5. The imbalance in favor of either side 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 58,000 and USD 60,000: 270 call options and 1,800 put options. The net result is in favor of $90 million in bearish (bearish) instruments.
  • Between 60,000 USD and 62,000 USD: 630 call options and 350 put options. The net result is in favor of $15 million in bearish (bearish) instruments.
  • Between USD 62,000 and USD 64,000: 1,560 call options and 370 put options. The end result is $75 million in favor of bullish (bull market) instruments.
  • More than $64,000: 2,890 call options and 100 put options. The end result is complete dominance, and the bulls made a profit of $175 million.

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. However, traders could have sold put options, effectively gaining active exposure to bitcoins above a certain price. Unfortunately, there is no easy way to estimate this impact.

related: The indicators on the Bitcoin chain indicate that the 2017-style bull market will continue

The Bulls have a clear opportunity to make a profit of $175 million

Currently, the price of Bitcoin fluctuates around US$62,000, and the bulls have incentives to increase BTC by 3.5% to US$64,000 before expiration on Friday. In this case, their estimated profit should increase by $100 million.

On the other hand, considering that Bitcoin rose by 39% in October, if the BTC maturity price remains below $62,000, the shorts will be more than happy to bear a loss of $15 million.

Avoiding a profit of $175 million from a long position is currently the best case for a short position, because during a bull market, the effort required by sellers to influence prices is enormous and usually ineffective.

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