$ 810 million worth of bitcoin options expire tomorrow (Friday, September 17) and derivative data shows bulls are trying to push the price above $ 50,000.
Over the past decade, Bitcoin has tested the resistance level of $ 44,500 several times, and that represents a 16% decrease from the local high of $ 53,000 last week. According to options market data, even unwinding long positions worth $ 3.4 billion on September 7, when the price fell 18.7%, wasn’t enough to allay bulls’ optimism.
Bitcoin price chart | Source: TradingView
Looking at Bitcoin price history, September 4th of the past 5 years has shown a dismal performance, ending August at $ 47,110.
Regardless of the price, institutional acceptance is steadily increasing. On September 13th, Morgan Stanley, one of the largest banks in the United States, appointed a top analyst to its dedicated crypto research team.
However, the main positive trigger for a bull run of 50% or more came from the SEC approval of an exchange traded fund (ETF). Fidelity Digital Assets, an investment arm of global fund manager Fidelity, held a private meeting with several SEC officials on September 8 to discuss the benefits and risks of a product Bitcoin is tradable.
Fidelity tabled a Bitcoin ETF proposal called the Wise Origin Bitcoin Trust in March 2021, but the regulator continued to delay its final decision. In addition, more than 20 similar applications from other companies were submitted but not accepted.
Bitcoin Options Open Interest for September 3rd | Source: Bybt.com
September 17 will be a test of strength for the bears as 88% of the $ 310 million put options were placed at $ 47,000 or below. Therefore, if Bitcoin trades above this level on September 17th, the open interest (OI) of the neutral to bearish put is only $ 36 million.
A put option is the right to sell Bitcoin at a set price on a set expiration date. Therefore, a put option with an exercise price of $ 45,000 will become worthless if Bitcoin trades above that level tomorrow at 4:00 p.m. KST.
The clear advantage of the cops
A broader perspective also gives the bulls some edge as the total amount of open positions on calls is $ 500 million, which is 62% of the call-to-put ratio.
However, this data is misleading as excessive optimism can nullify most of the bulls’ bets. For example, if the BTC price is below $ 47,000 at the time of expiration, the bulls’ open interest is only $ 34 million.
Here are the four most likely scenarios considering current prices. An imbalance in favor of either party represents a potential gain from the expiration.
- From $ 45,000 to $ 46,000: 240 buy orders vs. 1,980 sell orders. The net result is $ 78 million in favor of put options (bears).
- From $ 46,000 to $ 48,000, the net result is a balance between the bears and the bulls.
- From $ 48,000 to $ 50,000: 3,500 buy orders vs. 620 sell orders. The net result is $ 143 million in favor of the call (bulls).
- Over $ 50,000: 4,150 buy orders vs. 260 sell orders. The net result is that bulls dominate with an open interest of $ 195 million.
This rough estimate looks at calls used exclusively in bullish strategies and employs neutral to bearish trades. Unfortunately, real life isn’t that simple as more complex investment strategies may have been implemented.
Swing for cops to crack $ 50,000
Both buyers and sellers will show their strength in the hours before the options expire on Friday, and the bears will seek to minimize losses by keeping the price below $ 48,000. On the flip side, the bulls can take control of the situation if Bitcoin stays above $ 48,000.
The prime level for the bears is at $ 50,000, where the bulls have significant momentum to gain the upper hand on the weekly schedule and gain a $ 195 million advantage.
There is still room for additional volatility before the options expire and the bulls appear to be on top.
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According to Cointelegraph