Bitcoin bears need to drop below $27,000 before $900 million options expire on Friday

A $900 million weekly bitcoin options contract expiring on May 12 could determine whether the price falls below $27,000.

Bitcoin Price Rejected Again at $30,000

BTC bears will attempt to take advantage of adverse macroeconomic events, Silk Road token FUD, and volatility caused by spikes in Bitcoin transaction fees to drag the price down over the next few days.


Bitcoin Price Volatility 4 Hour Expiration Time contract Options | Source: TradingView

BTC broke through $29,800 on May 6, but the trend quickly changed as resistance was stronger than expected.

The ensuing two-day correction of 8.2% tested support at $27,400, supporting the sideways trading view as investors assess the dynamics of the economic crisis and its potential impact on the digital currency’s downside.

Meanwhile, billionaire investor Warren Buffett, owner of Berkshire Hathaway, is no longer optimistic about the growth of the U.S. economy. This pessimistic scenario for the global economy could explain why some bitcoin traders have decided to reduce their exposure over the past week, making a break above $30,000 much less likely.

Bitcoin options: Phe is too optimistic

There was $900 million in open interest (OI) in options expiring on May 12, but the actual figure would be lower as bears expect the price to be below $28,000.

Those traders were overly optimistic after bitcoin prices rose 11.2 percent between April 9 and April 14, testing resistance at $31,000.


billionMr. OI is very suitable copper choose bitcoin 12/5 | Source: CoinGlass

A put ratio of 1.65 indicates an imbalance between $560 million in OI calls (calls) and $340 million in puts (puts).

But if the bitcoin price remains close to $27,500 at 15:00 (UTC) on December 5, only $11 million of call options are available. This spread is because the right to buy Bitcoin for $28,000 or $29,000 would be useless if BTC were trading below that level at expiration.

PBitcoin bulls target $28,000 to balance the scale

Below are the 4 most likely scenarios based on current price action. The number of option contracts available for 12/5 calls and puts varies depending on the price at expiration.

The difference in which side is favored will create a theoretical profit for that side:

From $25,000 to $27,000: 100 calls and 9,900 puts. The bears took complete control of the market, taking in $230 million.

– From $27,000 to $28,000: 400 calls and 5,000 puts. The end result favored the $120 million seller.

– From $28,000 to $29,000: 1,500 calls and 2,100 puts. The result is a balance between puts and calls.

From $29,000 to $30,000: 3,300 calls and 800 puts. The end result was in favor of a $70 million call option instrument.

This rough estimate takes into account calls and puts used in call options, specifically for neutral to bearish trades. Even so, this oversimplification ignores more complex investment strategies.

For example, a trader can sell a put option, effectively gaining positive exposure to Bitcoin above a certain price. Unfortunately, there is no easy way to estimate this effect.

Finally, after it became clear that the Bitcoin network was functioning as designed, the selling pressure dissipated, leading to a stabilization of the Bitcoin price around $27,500. However, traders should be cautious as bears remain in a better position to favor negative price action at Friday’s weekly options expiration.

Ming Ying

As reported by Cointelegraph

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