Bitcoin bears are attempting to keep Bitcoin’s price below $62000 on Friday for the expiry of their short-term options bets. They need the option strike prices to be at or above this level so they can exercise them and collect a massive payout. What happens on Friday will have a significant impact on whether BTC has more gains ahead, or if it is really coming down from its highs of December 2017.
The “what happens when bitcoin options expire” is a question that has been asked often. The answer is that the bears are trying to keep the price of BTC below $62K for Friday’s options expiry.
The SEC’s recent exchange-traded fund (ETF) approval propelled Bitcoin’s (BTC) 90 percent year-to-date rise, and ProShares’ Bitcoin Strategy ETF ($BITO) was able to gather $1.1 billion in assets under management in the first 48 hours of listing.
The US Treasury issued its stablecoins report on November 1st, essentially urging Congress to regulate the business. In summary, the working group anticipates that regulatory authorities will impose the same rules on stablecoin issuers as they do on insured depository institutions.
Although the effects of a prospective stablecoin legislation on cryptocurrency markets are uncertain, stablecoins are essential for exchanges, market makers, and individual investors looking for security. Despite this, investors must consider the risk that stablecoin issuers may simply relocate their business outside of the United States’ jurisdiction.
Bitcoin is trading in a declining channel with resistance at the $62,000 to $63,000 level with less than 12 hours till Friday’s $1.15 billion options expiration.
In USD, the price of bitcoin on Coinbase. TradingView is the source of this information.
In USD, the price of bitcoin on Coinbase. TradingView is the source of this information.The bulls’ extreme confidence, as seen by the $68,000 and higher bets for the Nov. 5 expiration, might have been due to the ETF assumption. Bulls may have lost a chance to make some substantial gains while holding $740 million in call (purchase) options.
Bitcoin options open interest for November 5th. Bybt is the source.
The 11,215 BTC call (buy) options seem to have an 82 percent lead over the 6,146 BTC put (sell) options at first glance. Even yet, the 1.82 call-to-put ratio is misleading since some of those prices now seem to be unrealistic.
If Bitcoin’s price stays over $60,000 at 8:00 a.m. UTC on November 5, for example, just $70 million of the $405 million worth of put (sell) options will be available upon expiration. If Bitcoin is trading over $55,000, owning the right to sell it at that price is worthless.
To balance the scales, the Bears will require less than $62,000.
The four most probable possibilities for the $1.15 billion expiration on November 5 are shown below. The possible profit is represented by the imbalance favoring either side. In other words, the number of active call (buy) and put (sell) contracts fluctuates based on the expiration price:
- 270 calls vs. 1,800 puts between $58,000 and $60,000. The total outcome is a $90 million advantage for put (bear) instruments.
- 630 calls vs. 350 puts between $60,000 and $62,000. The total outcome is a $15 million advantage for put (bear) instruments.
- 1,560 calls vs. 370 puts between $62,000 and $64,000. As a consequence, the call (bull) instruments have a $75 million advantage.
- Over $64,000, there are 2,890 calls and 100 puts. Bulls profited $175 million as a consequence of their full domination.
Call (buy) options are employed in bullish tactics, whereas put (sell) options are used primarily in neutral-to-bearish transactions. A trader, on the other hand, may have sold a put option to earn positive exposure to Bitcoin above a certain price. Regrettably, there is no simple method to calculate this impact.
Related: Bitcoin on-chain metric predicts bull run similar to 2017
The Bulls have a good chance of making a $175 million profit.
Bitcoin’s price is now hovering at $62,000, with incentives in place for bulls to drive it up 3.5 percent to $64,000 by Friday’s deadline. Their expected earnings should rise by $100 million in that situation.
Bears, on the other hand, would be happy to face a $15 million loss if the BTC expiration price remained below $62,000, given Bitcoin’s 39 percent surge in October.
The bears’ best-case scenario right now is avoiding a $175 million profit from bulls, since during bull runs, the amount of effort required to influence the market is enormous and typically useless.
The author’s thoughts and opinions are purely his or her own and do not necessarily represent those of Cointelegraph. Every investing and trading decision has some level of risk. When making a choice, you should do your own research.
Bitcoin’s options expiry date is June 2021. The Bitcoin bears are trying to keep BTC price below $62K for Friday’s options expiry. Reference: bitcoin options expiry june 2021.
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