Bitcoin Bulls On the Driving Seat in Friday’s Options Expiry

The world’s largest cryptocurrency Bitcoin (BTC) is poised for the strongest weekly close after March this year, amid a flurry of applications for spot Bitcoin ETF from some of the largest financial institutions in the world.

Bitcoin is currently flirting around $30,000 levels after making strong gains earlier this week. As of press time, BTC is trading at $30,015 with a market cap of $582 billion.

BlackRock has put its foot in the door with its spot Bitcoin ETF application, thereby triggering a major euphoria in the crypto market. “An approval would profoundly impact the market structure of Bitcoin, as it would reduce the barriers for financial advisers to offer exposure” to the token, Vetle Lunde, senior analyst at K33 Research, wrote in a note.

Cathie Wood, the CEO and chief investment officer of ARK Invest, provided insights into why the firm is optimistic about the price of Bitcoin and has set a target of $1 million. Wood believes that Bitcoin has the potential to outperform even in a deflationary environment due to its ability to address the counterparty risk associated with the traditional financial system.

Bitcoin Options Expiry, Bears Guard Off-Guard

Earlier this month after the strong SEC action against Coinbase and Binance, the BTC price dropped to $26,300 fueling bearish trades in the options market. As per data on Deribit, the put-to-call ratio of 0.82 compares the open interest of buy options worth $415 million to sell options worth $300 million. However, the actual outcome will be lower because bearish traders were taken by surprise when Bitcoin surged by 10% in just two days.

For example, if Bitcoin’s price stays around $29,800 at 8:00 am UTC on June 23, there will be only $5 million worth of put options. This difference occurs because the right to sell Bitcoin at $28,000 or $29,000 becomes invalid if BTC is trading above that price at the time of expiration.

On the other hand, bulls are likely to take away a profit of $250 million in today’s expiry. Below are the likely scenarios depending on the BTC price range.

• For the price range between $27,000 and $28,000, there are 3,500 buy options (calls) compared to 1,200 sell options (puts). This results in a net advantage of $60 million for the buy instruments.
• In the price range between $28,000 and $29,000, there are 7,300 buy options (calls) versus 500 sell options (puts). The net advantage for the buy instruments increases to $195 million.
• Moving to the range between $29,000 and $30,000, there are 8,600 buy options (calls) and only 100 sell options (puts). The advantage for the buyers (bulls) expands to $250 million.
• Finally, for the range between $30,000 and $31,000, there are 10,400 buy options (calls) and no sell options (puts). The bulls have complete control, resulting in a profit of $310 million.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.