Bitcoin bulls target $ 50,000 as BTC options expire near $ 655 million on Friday

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Bitcoin (BTC) failed to break the critical psychological barrier of $ 50,000 on Aug 23 and has since retested the $ 47,000 support. If historical data plays a role in the price of Bitcoin, September was negative for 4 of the previous 5 years.

Cointelegraph employee and market analyst Michaël van de Poppe recently said that Ether’s (ETH) breakthrough above $ 3,500 could be a leading indicator of Bitcoin’s next bull run, and now that Ether is trading at $ 3,700, traders are eagerly awaiting the next step from BTC.

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The cops could look forward to El Salvador’s “Bitcoin Law” due to take effect on September 7th. Additionally, the recent $ 150 million approval of the Bitcoin Trust fund by the country’s legislative assembly is another potentially optimistic development.

The money will be used to help install government-sponsored crypto ATMs and provide incentives that encourage the adoption of Chivo, the government-sponsored digital wallet.

This week, Coinbase also saw a large Bitcoin outflow after a relatively stable period. The move brought the exchange’s balance below 700,000 BTC, a value last seen in December 2017. These moves are usually viewed as bullish as they signal that holders are less likely to sell coins in the short term.

Bitcoin options aggregate open interest for September 3rd. Source: Bybt.com

The September 3 expiry will be a test of strength for the bulls as 93% of the $ 390 million call (buy) options were placed at $ 48,000 or higher.

Additionally, these neutral to bullish instruments dominate the weekly expiry by 48% compared to the protective put options of $ 265 million.

The 1.48 call-to-put ratio is deceptive, however, as the bulls’ over-optimism could ruin most of their bets if Bitcoin price stays below $ 48,000 at 8:00 a.m. UTC on Friday. After all, what good is a right to purchase Bitcoin for $ 52,000 if it trades below that price?

Bears were also surprised

78% of put options that give the buyer the right to sell bitcoin at a predetermined price were placed at $ 46,000 or lower. These neutral to bearish instruments will become worthless if Bitcoin trades above this price on Friday morning.

Below are the four most likely scenarios that take into account the current price level. The imbalance that benefits both sides represents the potential gain from the process.

  • Between $ 45,000 and $ 46,000: 140 calls vs. 1,220 puts. The net result is $ 48 million, with the protective put instruments (bears) benefiting.
  • Between $ 46,000 and $ 48,000: 590 calls vs. 735 puts. The net result is balanced between bears and bulls.
  • Between $ 48,000 and $ 50,000: 1,930 calls vs. 120 puts. The net result is $ 88 million, favoring the call (bull) options.
  • Over $ 50,000: 3,310 calls vs. 0 puts. The net result is complete dominance with bullish instruments valued at $ 165 million.

The above data shows how many contracts will be available based on the expiry price on Friday.

This rough estimate takes into account that call (buy) options are used in bullish strategies, while put (sell) options are only used in neutral to bearish trades. Unfortunately, real life is not that simple because it is possible for more complex investment strategies to be employed.

For example, a trader could have sold a put option, effectively taking positive exposure to Bitcoin above a certain price. Still, there is no easy way to measure this effect, so the simple analysis above is the best guess.

There are incentives for cops to try and break the $ 50,000 mark

These two competing forces will show their strength and the ears will try to minimize the damage. On the flip side, the bulls have modest control over the situation if the BTC price stays above $ 48,000.

The main test will be the $ 50,000 level as bulls have significant incentives to wipe out every single protective put option and gain a $ 165 million advantage.

The bear’s only hope lies in some surprising regulatory news or a negative result for Bitcoin price emerging from U.S. jobless claims on September 2nd.

While there is still room for additional volatility before it expires, the bulls appear to be better positioned.

The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement carries risks. You should do your own research when making a decision.