Lower inflationary pressure has increased crypto investors’ appetite for risk-on markets, ending the bears’ ability to profit from the $580 million in Bitcoin options that expire on January 20th.
Bitcoin.
B.T.C
The tickers are down.
was $22,866.
The price remains above $20,700 for Week 4, raising the Bulls’ hopes to $23,000 or $25,000. The best-case scenario was due to easing inflationary pressure on wholesale prices of commodities by December 2022, confirmed on 18 January.
The U.S. Producer Price Index, which measures final demand prices across thousands of categories, also fell 0.5% from last month.
Eurozone inflation also rose 9.2% year-on-year in December, a second decline from October’s record 10.7%. A warmer-than-expected weather eased gas shortages, lowered energy prices and raised analysts’ hopes for a “soft landing.” Analysts say the soft lending will prevent a deeper recession and force central banks to hold off on raising interest rates.
This week’s $580 million in BTC options expiring January 20 looks like an easy win for the bulls, as a 23% rally above $21,000 for seven days is key. Owners (or owners) call this last step a market bottom and the potential end of a bear market, but the options market could be the answer.
Can bull options help bulls secure the $20,000 floor?
This may seem far-fetched now, but seven days ago, Bitcoin was trading below $17,500. Literal bets will be made when the daily options expire on January 20, and the Bears will find their options worthless.
The bears’ main hope is that the U.S. central bank will raise interest rates by 50 basis points at its next meeting, but that won’t happen until Feb. 1. Dec., the second consecutive spending cut. The odds of a 25 basis point increase in interest rates are better, a sign that the central bank’s efforts to curb inflation are having the desired effect.
If the bulls win on Jan. 20, they will increase selling pressure and extend the $20,000 support level.
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The Bitcoin bear was caught completely off guard.
The open interest for the options expiration on Jan. 20 is $580 million, but the actual number will be lower as the bear dies after Bitcoin hits $20,000. The Bulls are in full control, even if they have to pay $21,000 and up.
Bitcoin Options consolidates open interest on January 20. Source: Coinglass.
1.18 The call-to-put ratio reflects the imbalance between the $150 million percent open call (buy) and the $125 million percent put option (purchase). As long as the Bitcoin price remains above $17,000 at 08:00 UTC on January 13, put (sell) options worth up to $2 million are available. This discrepancy occurs because the right to sell Bitcoin at $16,500 or $15,500 is useless if BTC trades above that expiration level.
Bitcoin will give the bulls a profit of $21,000 to $220 million.
Below are the three most likely scenarios based on current prices. The number of call (bull) and put (bear) option contracts available on January 20 varies based on expiration prices. An imbalance in favor of each party includes theoretical benefits:
$19,000 to $20,000: Call 7,500, Call 1,700. The net result is $110 million in favor of Cole (Bull) instruments.
$20,000 to $21,000: Call 800 and Call 8,100. The net result was $165 million of Coal Equipment (Bull) profit.
$21,000 to $22,000: 200 calls compared to 10,600 calls. The net result is $220 million in favor of cattle.
The price of this crude mirrors the call options used in bullish bets and puts the options in neutral and bearish trades. However, this oversimplification ignores more complex investment strategies.
For example, a trader can sell a call option and have a negative impact on Bitcoin at a certain price, but unfortunately there is no easy way to measure this effect.
RELATED: US PPI, Retail Sales Report ‘Big Miss’ as Bitcoin hits new 4-month high.
Bitcoin bears should push the price just below $20,000 to minimize losses. On the other hand, bulls can drive up prices.
Source: CoinTelegraph.
