Fun

$1.35B in Bitcoin options expire this week — Do BTC bulls or bears have the upper hand?

News Feed - 2024-05-10 04:05:58

Marcel Pechman4 hours ago$1.35B in Bitcoin options expire this week — Do BTC bulls or bears have the upper hand?This week’s Bitcoin options expiry sits at $1.35 billion, but what is the expected impact on BTC price?5447 Total views276 Total sharesListen to article 0:00Market AnalysisOwn this piece of crypto historyCollect this article as NFTJoin us on social networksWhenever Bitcoin"s (BTC) price action exhibits significant corrections, analysts and traders are quick to search for a reason, often pointing fingers at derivatives markets where bears allegedly exploit futures contract liquidation levels or anticipate increased profits from weekly BTC options expiries. 


Such talk has been on the decline recently, thanks to Bitcoin’s range-bound price action, but now that murmurs of a trend reversal have come back, let’s take a look at how whales are positioned using Bitcoin derivatives markets.Will the May 10$1.35 billion BTC options expiry bring volatility?


The recent failure to maintain prices above $65,000 on May 6 is an example of how some market participants blame the weekly options expiry for the recent downtrend. If this were the case, which can be inferred by BTC derivatives metrics, further downward pressure could be expected ahead of the 8:00 am UTC expiry on May 10.


From a top-down perspective, the $1.35 billion options open interest seems substantial enough to justify the effort from Bitcoin bears. However, a more detailed analysis reveals a different scenario. Deribit holds an 84% market share for the May 10 options expiry, so data will primarily be extracted from that exchange. Since the Chicago Mercantile Exchange (CME) only offers monthly contracts, it was excluded from the analysis.


It"s worth noting that call (buy) and put (sell) options are not always matched when stacked against each other, a common feature for such instruments regardless of the underlying asset. Thus, the first relationship to consider is the volume discrepancy between these instruments. Generally, increased demand for puts indicates bearish markets.Deribit BTC options put-to-call volume. Source: Laevitas.ch


Note that the average BTC options put-to-call volume at Deribit stood at 0.60 for the past 10 days, meaning put (sell) instruments had 40% lower volumes compared to call (buy) options, which has been the norm for the past month. In essence, it"s difficult to justify that bears have set some kind of trap or anticipated Bitcoin"s failure to sustain $65,000 on May 6.Bitcoin bulls cast overly optimistic bets


However, one should not take every call option buyer at face value, especially given that there are less than 13 hours ahead of the actual expiry on May 10. For instance, there is hardly a way to justify a right to buy Bitcoin at $74,000 or even $90,000 in such a short time. Therefore, one should not account for those overly optimistic bets when measuring the open interest.Open interest for May 10 Bitcoin expiry at Deribit, in BTC terms. Source: Deribit


Even though the put-to-call ratio shows a 35% lower demand for put options, bears are at less risk, as most of the call instruments were placed at $63,000 and higher. In fact, the open interest for call options below this level is $91 million, which means 87% of them will be worthless on May 10. However, if Bitcoin bulls manage to reestablish the $64,000 support, the open interest for call options will surpass the put instruments by $115 million.


Related:Despite Bitcoin price volatility, factors point to BTC’s long-term success


While bears may have avoided significant losses had Bitcoin stayed above $65,000, this doesn"t necessarily mean they will come out ahead in the end. Put options at $61,500 or higher have a total open interest of $104 million, which is just enough to balance the equation. The best-case scenario for bears requires a Bitcoin price below $61,000 to secure a $100 million advantage.


There is no indication that Bitcoin bears placed additional bets using BTC options to profit from a price crash ahead of the May 10 expiry. There was no unusual demand between put and call instruments, and there is no specific price level that greatly benefits bears. Whatever strategies were employed, the result is an apparent balanced impact at $62,000, suggesting no price surprises are expected.


This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.# Bitcoin# Cryptocurrencies# Bitcoin Price# Markets# Derivatives# CME# Market Analysis# Bitcoin Options# WhaleAdd reaction

News Feed

The Fed’s BTFP program is officially over — Will Bitcoin price take another blow?
Allen Scott10 hours agoThe Fed’s BTFP program is officially over — Will Bitcoin price take another blow?While the end of BTFP marks a significant moment for financial markets, its direct impact on Bitcoin’s price r
Bitcoin falls into demand zone — Will SOL, XRP, KAS and AAVE follow?
Rakesh Upadhyay5 hours agoBitcoin falls into demand zone — Will SOL, XRP, KAS and AAVE follow?Bitcoin may find buyers close to $56,000, benefitting select altcoins such as SOL, XRP, KAS, and AAVE.3620 Total views8 Tota
Dutch exchange Bitvavo taps Figment to expand staking services
Gareth Jenkinson9 hours agoDutch exchange Bitvavo taps Figment to expand staking servicesInstitutional staking platform Figment will become an additional infrastructure provider to Dutch exchange Bitvavo.4691 Total views
Bitcoin price falls to $65K as $400M crypto market liquidation rocks BTC and altcoins
Nancy Lubale3 hours agoBitcoin price falls to $65K as $400M crypto market liquidation rocks BTC and altcoinsBitcoin price sees sharp sell-off as today’s downside move liquidates heaps of BTC and altcoin traders who wer
Jesse Coghlan6 hours agoDo Kwon and Terraform Labs ask judge to toss SEC’s lawsuitDo Kwon, the co-founder of the now-collapsed Terra ecosystem, maintains he and his firm did not skirt U.S. securities laws.4122 Total vi
North Carolina's CBDC ban bill vetoed by governor
Brayden Lindrea4 hours agoNorth Carolina"s CBDC ban bill vetoed by governorGovernor Roy Cooper was slammed for not putting “partisan politics aside” to support a law that would benefit all North Carolina residents.14
Martin Young5 hours agoFormer Andreessen Horowitz execs launch Bastion after $25M funding roundThe Web3 startup came out of stealth mode after a seed funding round led by a16z crypto, enabling firms to integrate web3 inf
Biggest Movers: ZIL Jumps on Metapolis News, as AAVE Almost 15% Higher on Friday
Biggest Movers: ZIL Jumps on Metapolis News, as AAVE Almost 15% Higher on Friday ZIL was on the rise yet again to end the week, as prices are now trading almost 300% higher than on
Uzbekistan Warns Citizens to Avoid Unlicensed Cryptocurrency Exchanges
Uzbekistan Warns Citizens to Avoid Unlicensed Cryptocurrency Exchanges A government agency in Uzbekistan has published a list of unauthorized crypto exchanges that residents of the
XRP’s 30% Jump To $2.8: Analyst Says This ‘Classic Confirmation’ Must Happen First
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Finder’s Fintech Experts Predict Cardano Will End the Year at $0.63 per Unit
Finder"s Fintech Experts Predict Cardano Will End the Year at $0.63 per Unit Following the recently published bitcoin price prediction report issued by the product comparison web p
Bitcoin Golden Cross Pattern Says The Crash To $100,000 Is Normal – What To Expect Next
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu