Earlier this week, Cointelegraph reported on the importance of the $ 6.1 billion Bitcoin (BTC) options expiring on March 26th. The article clearly stated that the bulls were in control if I excluded options to put (put) below $ 47,000, which is likely that BTC is currently hovering above $ 50,000.
With the expiration date approaching, traders are unlikely to want to pay for the right to sell bitcoin at $ 47,000. The same can be said for very high bid (buy) options of $ 60K and above. Thus, the total open interest rate of $ 6.1 billion inflated with worthless options.
Could there be something hidden in bitcoin options currently pressing down on price pressures? To determine this, you need to analyze how you make these calls and put your stack under $ 50,000.
On March 26th, BTC sparked open interest in the event of a strike. Source: Bybt.com
Total open interest increased slightly over the past 10 days to 105,000 BTC options. Now that the price of BTC has decreased to $ 51,500, it is now worth $ 5.4 billion. As mentioned earlier, this is not a fair estimate if you discount neutral bearings below $ 45,000, which are actually useless at the moment. This data means that there are only 11,100 BTC contracts left.
This number only corresponds to the open interest options of $ 572 million, or 20% pending. Neutral calls to bulls targeting between $ 20,000 and $ 56,000 bring in revenues of 20,850 BTC, or $ 1.07 billion at the current BTC price. That number is double the number of competitors and still leaves the Bulls complete control over Friday’s close.
Will you change the price to $ 45,000?
If the bitcoin price somehow drops to $ 45,000 at 8:00 UTC on March 26th, the 11,100 short options will create additional downside pressure. On the other hand, this would roughly be offset by a neutral 11,050 bullish call of $ 20,000 to $ 44,000. The number of buy (put) options actually exercising will match the put (put) option without creating an imbalance.
So if the media or analysts refer to $ 45,000 as a game changer for card sellers to control option expiration, they are wrong. Undoubtedly, some of these calls could have been used in various strategies, thus providing a neutral stance for the owner.
The same can be said for those who have neutral to bearish selling options. Not necessarily because buyers welcome lower bitcoin prices, but rather because owners also buy futures contracts or sell deals with slightly higher strike options.
What is the likely cause of the current drop in Bitcoin prices?
The human mind needs stories, but the marketplace doesn’t always work that way. There have been at least three other incidents of fear, uncertainty, and suspicion (RD&D) in the past week.
Among the best that comes to mind are Ray Dalius: “There is a high probability that the United States will ban Bitcoin” and comments from Amundi Executive Vice President Vincent Mortier, who suggested that cryptocurrency regulation could lead to “difficult price corrections.”
Another supposed bearish announcement was made on March 22nd, when Federal Reserve Chairman Jerome Powell stated that “Bitcoin is too volatile to be money” and “is not backed by anything.”
Usually such data plays a role in dampening investor expectations, but no one can know for sure what makes each market participant trade at each price level.