Newblock
  • News
    • Bitcoin
    • Ethereum
    • XRP
    • Solana
    • Cardano
    • Blockchain News
    • Press Releases
    • Events
  • Analysis
    • Market Analysis
    • Price analysis
  • Ranking
No Result
View All Result
  • Login
Buy crypto
Newblock
  • News
    • Bitcoin
    • Ethereum
    • XRP
    • Solana
    • Cardano
    • Blockchain News
    • Press Releases
    • Events
  • Analysis
    • Market Analysis
    • Price analysis
  • Ranking
No Result
View All Result
Newblock

Data shows Bitcoin traders’ neutral view ahead of Friday’s $750M BTC options expiry

January 13, 2022
in Bitcoin News
397 26
0
Share on FacebookShare on Twitter

Bitcoin (BTC) has bounced 11% from the $39,650 low made on Jan.10 and currently the price is battling with the $44,000 level. There are multiple explanations for the recent weakness, but none of them seem sufficient enough to justify the 42% correction that took place since the Nov. 10 all-time high at $69,000.

At the time (Nov. 12), negative remarks from the U.S. Securities and Exchange Commission (SEC) were issued at the rejection of VanEck’s physical Bitcoin exchange-traded fund (ETF). The regulator cited the inability to avoid market manipulation due to unregulated exchanges and heavy trading volume based on Tether’s (USDT) stablecoin.

Then, on Dec. 17, the U.S. Financial Stability Oversight Council recommended that state and federal regulators review regulations and the tools that could be applied to digital assets. On Jan. 5, BTC price corrected again after the Federal Reserve’s December FOMC session, which confirmed plans to ease debt buyback and likely increase interest rates.

Regarding derivatives markets, if Bitcoin price trades below $42,000 by the Jan. 14 expiry, bears will have a $75 million net profit on their BTC options.

Bitcoin options aggregate open interest for Jan. 14. Source: Coinglass

At first sight, the $455 million call (buy) options are overshadowing the $295 million puts, but the 1.56 call-to-put ratio is deceptive because the 14% price drop over the last three weeks will likely wipe out most of the bullish bets.

If Bitcoin’s price remains below $44,000 at 8:00 am UTC on Jan. 14, only $44 million worth of those call (buy) options will be available at the expiry. There is no value in the right to buy Bitcoin at $44,000 if BTC is trading below that price.

Bears might bag a $75 million profit if BTC is below $42,000

Here are the four most likely scenarios for the $750 million options expiry on Jan. 14. The imbalance favoring each side represents the theoretical profit. In practice, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:

  • Between $40,000 and $43,000: 480 calls vs. 2,220 puts. The net result is $75 million favoring the put (bear) options.
  • Between $43,000 and $44,000: 1,390 calls vs. 1,130 puts. The net result is balanced between call and put options.
  • Between $44,000 and $46,000: 1,760 calls vs. 660 puts. The net result is $50 million favoring the call (bull) options.
  • Between $46,000 and $47,000: 1,220 calls vs. 520 puts. The net result is $125 million favoring the call (bull) options.

This crude estimate considers put options being used in neutral-to-bearish bets and call options exclusively in bullish trades. However, this oversimplification disregards more complex investment strategies.

For instance, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin (BTC) above a specific price. But, unfortunately, there’s no easy way to estimate this effect.

Related: Traders say Bitcoin run to $44K may be a relief bounce, citing a repeat of December’s ‘nuke’

Bulls need $46,000 for a decent win

The only way bulls can score a significant gain on the Jan. 14 expiry is by sustaining Bitcoin’s price above $46,000. However, if the current short-term negative sentiment prevails, bears could easily pressure the price down 4% from the current $43,800 and profit by up to $75 million if Bitcoin price stays below $42,000.

Currently, options markets seem balanced, giving bulls and bears equal odds for Friday’s expiry.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

You might also like

G7 Countries Crypto

G7 Countries, EU Taking Measures to Prevent Crypto Use to Evade Sanctions

March 5, 2022
Coinbase CEO Russians Crypto

Coinbase CEO Says Ordinary Russians Use Crypto as a Lifeline as the Ruble Collapses

March 5, 2022

Related News

G7 Countries Crypto

G7 Countries, EU Taking Measures to Prevent Crypto Use to Evade Sanctions

by Editorial Team
March 5, 2022
1

G7 countries and the European Union are examining ways to stop the use of cryptocurrency by Russia to evade sanctions....

Coinbase CEO Russians Crypto

Coinbase CEO Says Ordinary Russians Use Crypto as a Lifeline as the Ruble Collapses

by Editorial Team
March 5, 2022
1

The CEO of the Nasdaq-listed crypto exchange Coinbase says ordinary Russians are using cryptocurrency as a lifeline now that their...

Bitcoin Mining Difficulty Drops

Bitcoin Miners Catch a Break as Mining Difficulty Drops for the First Time in 3 Months

by Editorial Team
March 5, 2022
1

Bitcoin miners got a small break on March 3, after the network’s mining difficulty shifted downward for the first time...

Arbitrum Treasure DAO hack

Attacker Hacks Arbitrum’s Treasure DAO for Over 100 NFTs by Leveraging Marketplace Exploit

by Editorial Team
March 5, 2022
1

A non-fungible token market platform built on top of Arbitrum called Treasure DAO was hacked on March 3 at 7:33...

Next Post
Ripple Acquires 40% Stake in Cross-Border Specialist Tranglo

Ripple Acquires 40% Stake in Cross-Border Specialist Tranglo

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Get daily news updates to your inbox!

Popular

  • crypto price analysis

    BTC, ETH, BNB, ADA, SOL, XRP, LUNA, DOGE, DOT, AVAX

    21678 shares
    Share 8671 Tweet 5420
  • Google Launches Blockchain Division

    5331 shares
    Share 2131 Tweet 1332
  • Microsoft Reveals Activision Purchase for $68.7 Billion as an Approach to the Metaverse

    972 shares
    Share 389 Tweet 243
  • GAIMIN Brings Blockchain and NFTs to Minecraft – Press release Bitcoin News

    957 shares
    Share 383 Tweet 239
  • Coinbase exec says major Ethereum scaling improvements coming soon

    923 shares
    Share 369 Tweet 231

Recommended

India crypto

Indian Police Arrest 11 People in Cryptocurrency Scheme Defrauding 2,000 Investors

February 22, 2022
NFT news

3 things every NFT investor should know to avoid a tax nightmare

February 6, 2022
Newblock

Newblock is a blockchain news service that covers bitcoin and altcoin news, technical analysis & forecasts for bitcoin price and other altcoins.
© 2022 Newblock

Navigate Site

  • Blockchain news
  • Crypto Analysis
  • Ranking
  • Media Partnerships
  • Privacy Center
  • Contact Us
  • Donate

Follow Us

No Result
View All Result
  • News
    • Bitcoin
    • Ethereum
    • XRP
    • Cardano
    • Solana
    • Blockchain News
    • Press Releases
    • Events
  • Analysis
    • Market Analysis
    • Price analysis
  • Ranking
  • Buy Crypto
  • Privacy Center
  • Contact Us
  • Donate

Newblock is a blockchain news service that covers bitcoin and altcoin news, technical analysis & forecasts for bitcoin price and other altcoins.
© 2022 Newblock

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.