Bitcoin bullish risk loses $365 million after Friday’s BTC option expiration

Bitcoin (Bitcoin) Although it hit a record high of $69,000 on November 10, the price trend is not bullish. Some people believe that the descending channel formed 40 days ago is the dominant trend, and US$56,000 marks its current resistance.

BTC/USD price on FTX. Source: TradingView

After a report from the President’s Financial Markets Working Group on November 1st, the US regulators reviewed this bearish sentiment. SecondU.S. table currency issuers Should be subject to “appropriate federal oversight,” similar to banks and savings associations.

November 12, Bitcoin-backed exchange-traded funds (ETF) Request denied By the US Securities and Exchange Commission. To prove the denial, the regulator cited the lack of ability of its participants to prevent fraud and market manipulation in Bitcoin transactions.

Recently, on November 23, the Chairman of the Banking, Housing and Urban Affairs Committee of the US Senate issued a notice to a number of exchanges and stablecoin issuers.About consumers and Investor protection of stablecoins It is implied that lawmakers may be preparing to hold a hearing on the subject.

Nevertheless, the bulls may have different views on this type of news, because stablecoins are by no means necessary for the operation of Bitcoin. In addition, the US government is powerless to suppress projects and developers willing to move out of its jurisdiction.

Bitcoin options are mostly bullish and expire on November 26

Despite a 17% fall from the historical high of $69,000 in the past 14 days, Bitcoin call (buy) options still dominate the expiration date on November 26.

Bitcoin options aggregates open positions on November 26. Source: Bybt

At first glance, compared to the $885 million put (sell) instrument, the $1.9 billion call (buy) option dominates 113% of the weekly expiry. But the call option ratio of 2.13 is deceptive, because the recent decline may eliminate 90% of the call options.

For example, if the price of Bitcoin stays below $58,000 at 8:00 AM UTC on November 26, then at expiration, only $150 million of these call (buy) options will be worth. If the transaction price of Bitcoin is lower than that price, the right to buy Bitcoin at a price of $60,000 or $70,000 has no value.

A short position can earn a profit of less than US$56,000 of US$365 million

The following are the four most likely scenarios based on current price movements. For example, the data shows how many contracts with long (bullish) and short (bearish) instruments will be available on November 26. An imbalance that is beneficial to both parties represents theoretical profit:

  • Less than 56,000 USD: 720 call options and 7,490 put options. The net result is in favor of short (put) options of $365 million.
  • Between USD 56,000 and USD 58,000: 2,630 call options and 4,840 put options. The net result is $125 million in favor of bearish (bearish) instruments.
  • Between USD 58,000 and USD 60,000: 3,600 call options and 3,850 put options. The end result is balanced.
  • Between US$60,000 and US$62,000: 6,180 calls and 2,340 puts. The net result is a $230 million tilt towards bullish (bullish) instruments.

This rough estimate takes into account call options used in call bets and put options specifically used for neutral to put trading. However, traders could have sold call options, effectively gaining negative exposure to bitcoins above a certain price. Unfortunately, there is no easy way to estimate this impact.

The bulls have double motivation to defend $56,000

As shown by the 40-day declining channel, the bulls need to maintain the resistance level of $56,000 to avoid further loss of momentum. It must be remembered that it took less than two weeks for Bitcoin to return from $41,500 to $56,000 on October 10. Therefore, maintaining this level is essential to verify the historical high of November 10.

In addition, if the bulls manage to push the price of Bitcoin above $58,000, if the BTC bears gain the upper hand with the support of the regulatory wind, this will save them from a potential loss of $365 million. A decline of only 1.5% from the current US$56,800 may give bears enough confidence to instill more pain.

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