Bitcoin’s (BTC) 90% gain since the start of the year was largely supported by the recent SEC approval of exchange-traded funds (ETFs) and within the first 48 hours after listing, the ProShares Bitcoin ETF (BITO) Strategy raised $ 1.1 billion in assets under management.
On November 1, the US Treasury released its stablecoin report, which essentially called for Congress to regulate the industry. In short, the working group expects government agencies to require stablecoin issuers to meet the same criteria as insured custodians.
While the implications of potential stablecoin regulation on cryptocurrency markets are still unknown, stablecoins are critical for stock exchanges, market makers and retail investors looking for protection. Despite this, investors still need to explain the possibility that stablecoin issuers will react by moving their operations outside the jurisdiction of the United States.
Less than 12 hours before the $ 1.15 billion options expire on Friday, Bitcoin is trading in a downtrend channel and is meeting resistance at between $ 62k and $ 63k.
Bitcoin price on Coinbase in USD. Source: TradingView
ETF expectations could be the reason for the bulls’ over-optimism, which could be seen at the $ 68,000 and higher rates on November 5. Even with $ 740 million invested in call options, the bulls may have missed the opportunity to make some corresponding profit.
Bitcoin Options collects open interest rates on November 5th. Source: Bybt
At first glance, 11,215 BTC call (buy) options dominate with a weekly expiration date by 82% compared to 6,146 BTC put (sell) options. However, the 1.82 to buy ratio is misleading because some of these prices now seem out of reach.
For example, if the price of bitcoin stays above $ 60,000 c. At 0800 UTC on November 5, only $ 70 million of the $ 405 million in put options will be available after the expiration date. It doesn’t make sense to be eligible to sell bitcoins for $ 55,000 if they are trading at a price higher than that.
Bears need less than $ 62,000 to balance their weight.
Here are the four most likely scenarios for the $ 1.15 billion expiration on November 5. An imbalance in favor of both sides represents a theoretical profit. In other words, depending on the expiration price of the buy (buy) and sell (sell) contracts that become active, differ:
$ 58,000 to $ 60,000: 270 calls at 1,800 pips. The net result is subtracting the $ 90 million gadget (bear).
From 60 to 62 thousand dollars: 630 calls for 350 points. The net result favors the deduction of $ 15 million worth of gadgets (bears).
From $ 62,000 to $ 64,000: 1,560 calls for 370 points. The net result is $ 75 million in favor of Buying Instruments (Bull).
Over $ 64,000: 2890 calls per 100 put. The end result is complete dominance when the bulls make $ 175 million.
This rough estimate takes into account call (call) options used in bullish strategies and put (sell) options exclusively in neutral or bearish trades. However, a trader can sell a put option and actually get a positive position on bitcoin above a certain price. Unfortunately, there is no easy way to calculate this effect.
Related: The calculation of bitcoins on-chain indicates a continuation of the 2017-style uptrend.
Bulls have a clear chance of making $ 175 million in profit
Bitcoin price is currently hovering around $ 62,000 and the bulls have incentives to push BTC up 3.5% to $ 64,000 before Friday expires. In this case, their estimated income should increase by $ 100 million.
On the other hand, given that Bitcoin rose 39% in October, the Bears would like to take a $ 15 million loss if the BTC expiration price stays below $ 62,000.
Avoiding a $ 175 million profit from bulls is the best scenario for bears at the moment, because during bull cycles, the seller has to put in a huge effort to influence the price and are usually ineffective.