Bitcoin (BTC) has fully recovered from its recent plunge that brought the price back to the $ 53,000 support level. That goes back to the $ 57,500 freed by the bulls from the May 7 bearish pressure, the 3,500 bitcoin option, which is $ 200 million in open interest with an expiration of $ 1.1 billion.
Today’s rapid recovery may be driven in part by news that a new digital investment group (NYDIG) has partnered with Fidelity National Information Services (FIS) to create a foundation for US banks to provide cryptocurrency trading services.
Patrick Sales, NYDIG’s banking manager, told CNBC that many banks have already signed up for the program.
Moreover, the Mastercard survey showed that 40% of the 15,500 respondents intend to use cryptocurrency for payment in the next 12 months. In addition, it states that 77% of millennials are interested in learning more about cryptocurrencies.
Whatever the reason for the recent rebound in the price of Bitcoin, by the end of May 7, the bulls are now in a much better position.
Balance shopping-to-shopping ratios are misleading
May 7, BTC options open interest. Source: Bybt
Option buyers pay the premium in advance and therefore do not face significant liquidation risk. On the other hand, a buy (buy) option protects the buyer’s price, while a put (put) option protects the opposite.
This means that neutral and bearish traders tend to rely on put options. On the other hand, call options are more commonly used in bullish positions.
Analysts can easily dismiss Bitcoin’s Friday expiration given that the call rate is fixed. This means that open interest in options from neutral to bullish and neutral to bearish is balanced. However, these options will expire in less than 38 hours, making $ 65,000 or more of your calls useless.
Put options, the right to sell bitcoin for $ 48,000 on Friday, are also worthless today. To correctly interpret the potential impact of the May 7 deadline, analysts must rule out strikes that are very far from the current price.
The Bulls have an edge of $ 104 million to $ 57,000.
Call options (acquisitions) reach $ 60,000 on a total of 4,950 contracts ($ 285 million), and if Bitcoin hits $ 64,000 on May 7, another 1,620 contracts would raise call option interest rates by $ 93 million.
Alternatively, bearish put options can add up to 3,150 contracts to the $ 54,000 strike. They currently offer an open interest rate of $ 181 million, which will be increased by 2,800 contracts to $ 50,000. This level will increase open interest on call options by $ 161 million.
While the Bulls have a $ 104 million lead leading up to Friday’s expiration, that number will plummet to somewhere below $ 60,000. As you can see from the diagram, most of the connection options (1680 nodes) are located at this level.
Consequently, the bears have an incentive to keep the price below $ 60K. At least until May 7 at 08:00 UTC.