Bitcoin’s price movement is flat, despite hitting an all-time high (ATH) of $ 69,000 on November 10th.
BTC / USD price chart | Source: TradingView
The decline comes after a review by US regulators after a report by the US President’s Financial Markets Working Group (PWG) dated Jan.
On November 12, the US Securities and Exchange Commission (SEC) rejected the proposal for a spot Bitcoin ETF because the parties were unable to prevent fraud and market manipulation in trading.
More recently, on November 23, the chairman of the U.S. Senate Committee on Banking, Housing, and Urban Development posted notices to multiple exchanges and stablecoin issuers. Questions about consumer and investor protection in stablecoins suggest that lawmakers may be preparing a hearing on this issue.
However, the cops may have a different opinion on such news as stablecoins are not an integral part of Bitcoin’s performance. In addition, there is not much the US government can do to prevent projects and willing developers from escaping their jurisdiction.
Bitcoin bulls and bears weigh their brains on the expiration date
Despite the 17% pullback of $ 69,000 ATH over the past 14 days, Bitcoin call options are dominant on expiration today (Nov 26th).
Bitcoin Options OI summary for November 26th | Source: Bybt
$ 1.9 billion in calls dominated 113% with weekly expiration versus $ 885 million in put options. But the call-to-put ratio of 2.13 is inaccurate as the recent drop is likely to nullify 90% of bullish bets.
For example, if Bitcoin price is still below $ 58,000 at 3:00 p.m. KST, only $ 150 million worth of call options will be available when it expires. The right to buy Bitcoin for $ 60,000 or $ 70,000 is worthless if it trades below that price.
Here are the four most likely scenarios based on the current price movement. The imbalance in favor of each side represents the theoretical gain:
- Under $ 56,000: 720 buy orders vs. 7,490 sell orders. Net income favors a $ 365 million put option.
- From USD 56,000 to USD 58,000: 2,630 buy orders vs. 4,840 sell orders. Net income favors the $ 125 million put options.
- From $ 58,000 to $ 60,000: 3,600 buy orders vs. 3,850 sell orders. The net result is equilibrium.
- From $ 60,000 to $ 62,000: 6,180 buy orders vs. 2,340 sell orders. Net income shifted in favor of $ 230 million call options.
This rough estimate takes into account calls used in bullish bets and puts specifically for neutral to bearish trades.
As the 40-day descending channel shows, the bulls must hold the resistance at $ 56,000 to avoid further loss of momentum. It should be noted that it took less than two weeks to get Bitcoin from $ 41,500 to $ 56,000 on October 10th. Hence, it is important to maintain this level in order to validate the November 10th ATH.
If the bulls manage to push Bitcoin price above $ 58,000, they will also be saved from a potential loss of $ 365 million if the bears gain the upper hand in regulatory headwinds. A drop of just 1.5% from its current $ 56,800 level could give the bears enough confidence to inflict further pain.
Ethereum bulls are likely to make $ 130 million
Ether investors have no reason to complain after seeing a 344% gain in 2021 through November 24th. However, analysts fear that a test of the $ 4,000 resistance on the 19th will lower the current price level of $ 4,400.
Although Ether surpassed 16% in the last month alone and the ETH / BTC pair climbed to a 10-week high, Ether appears to be struggling with its own success.
ETH / USD price chart | Source: TradingView
Users continue to complain about Ethereum gas fees, which averaged over $ 45 over the past three weeks. Without a doubt, however, the largest DeFi and NFT markets continue to thrive on Ethereum.
I tried buying something for $ 5 using eth.
Gas charges are $ 480.45.
How sure are we that an Airbnb product manager isn’t the creator of Ethereum? pic.twitter.com/G35F0o6keO
– Chris Bakke (@ChrisJBakke) November 17, 2021
“I tried to buy something for $ 5 with ETH. The gas fee is $ 480.45. How can we be sure that an Airbnb product manager isn’t the creator of Ethereum?
Growing regulatory uncertainties in the US remain a key limiting factor for the rally in Ether. On November 24, the SEC made it clear that the cryptocurrency board will focus on the regulatory framework in its public meeting scheduled for December 2.
Even 1 million ETH burned since EIP-1559 was launched in August is not enough to keep the price of ether at ATH. With the network spending about 5.4 million ETH per year, ether remains an inflationary asset. However, the price of ether has increased 16% versus Bitcoin since October 25, partially reflecting that impact.
Despite the 10% correction to $ 4,400 since the ATH of $ 4,850 on Nov. 10, the call options at expiration were very dominant.
ETH Option Open Interest Summary for November 26th | Source: Bybt
The green area represents $ 820 million call options as a percentage of their expiration date on November 26th. This is an 87% difference compared to $ 440 million put options.
The 1.87 call-to-put ratio is far from accurate, however, as the recent drop in ETH is likely to wipe out 77% of bullish bets. For example, if the price of Ether remains below $ 4,400 when it expires, only $ 165 million in call options will be available.
Here are the three most likely scenarios based on the current price movement. The number of options contracts available today for call and put options depends on the ETH price at expiry. An imbalance in favor of both represents a theoretical gain:
- Under $ 4,100: 15,400 buy orders vs. 15,200 sell orders. The result is balance.
- From $ 4,200 to $ 4,500: 38,400 buy orders vs. 8,800 sell orders. The net result is $ 130 million in favor of the cops.
- Over $ 4,500: 50,200 buy orders vs. 2,300 sell orders. The net result favors the $ 215 million bull.
This rough estimate looks at calls used in bullish bets and places neutral to bearish trades. However, this does not imply more complex investment strategies.
The bears must push the price 7.5% from $ 4,400 to below $ 4,100 to level the scales and avoid losses of $ 130 million. On the flip side, the bulls will need a 2.3% rally to $ 4,500 to add $ 85 million to their profits. Right now, preferences in the options market are balancing out, tending towards a price range of $ 4,200 to $ 4,500, which brings in the bulls $ 130 million profit today.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
According to AZCoin News