Bitcoin (BTC) 2021 has shown impressive results, but traders who expect a record hold every month will probably be disappointed this week.
After a peak of $ 64,900 on April 14, a staggering 27% correction followed, bringing the BTC price down to $ 46,000.
This negative move wiped out more than $ 9 billion in fast-acting BTC futures contracts that most investors previously could not have imagined.
Although the price of bitcoin has recovered by 5800 dollars in the last 48 hours, bulls have not managed to surprise the bears in the option markets as both sides are approximately balanced until 30 April.
Bitcoin price (BTC) in USD on Coinbase. Source: TradingView
Just three months ago, total open interest on bitcoin futures was $ 11 billion, even though the record was reached on April 13 at $ 27.7 billion. However, it shows how important the effect of the recent price correction is.
Option markets, meanwhile, operate on a different basis where the buyer of the contract pays the premium in advance. Consequently, there is no risk of mandatory liquidation of the holder. While a buy (buy) option provides the buyer with protection against a bullish price, a put option works the other way around.
Therefore, those looking for neutral bearish strategies will rely heavily on put options. On the other hand, call options are used more often by up-and-coming traders.
While some exchanges offer weekly options, monthly contracts tend to attract large volumes. April will be no different as $ 72,000 BTC options worth $ 3.9 billion will expire at the current price of $ 54,500.
BTC pool options open interest at the outlet. Source: Bybt
Notice how the dominant April varieties differ from May or September. While long options are from neutral to bullish with a 41% increase in open interest rates as of April 30, a more detailed analysis is needed to interpret this data.
It is worth noting that not all options will trade after the expiration, as some of these strikes now seem irrational, especially with less than two days left.
Very bullish options are useless right now
To understand how these competing forces are balanced, one must compare the call and indicate the volume of options at each expiration price.
On April 30, you open interest in all BTC options. Source: Bybt
While calling (buying) options between $ 80k and $ 120k can seem outrageous, they are often used for “calendar spreading strategies”. As Cointelegraph previously explained, a buyer can make money even if BTC trades well during these strikes.
Ultra bullish options are almost useless right now, because there is no point in qualifying for $ 80,000 BTC on the April 30 expiration date. The same can be said for neutral to bearish short options of $ 48,000 or less.
Therefore, it is best to evaluate the trader’s position, except for these unrealistic hits.
$ 54,500 is a balanced case
Neutral call options range from 58,000 to 9,950 bitcoin contracts. This equates to $ 540 million in open interest at the current bitcoin price. Another 3,100 will hit the stage at $ 60,000 and up, resulting in the expiration of $ 780 million.
On the other hand, the lower put options fell to $ 51,000 on 12,000 BTC contracts, currently $ 650 million in open interest.
If the bitcoin price manages to fall below $ 50,000, an additional 3,850 put options will be exercised. This figure represents a potential open interest of $ 700 million for lower options.
At this point, both conversations and options seem to be almost balanced. Given that the difference between $ 100 million and $ 150 million is probably not enough to get any of the parties to push the price, the monthly maturity may be “quiet”.
Deribit, OKEx and Bit.com futures and options expire on April 30 at 8:00 UTC. Futures and options are listed on the Chicago Mercantile Exchange at 15:00 UTC.