Bitcoin Derivatives Data Predicted BTC Price Under $ 30,000 Before Options Go $ 800 Million On Friday

Bitcoin Derivatives Data Predicted BTC Price Under $ 30,000 Before Options Go $ 800 Million On Friday

Bitcoin (BTC) briefly rose above $ 32,000 on May 31, but the excitement lasted less than four hours after the resistance level became more difficult than expected. The $ 32,300 level represented a 20% increase from the May 12 low of $ 27,000 and gave much-needed bulls hope to buy calls at $ 34,000 and above.

Strong optimism turned into the seller’s market on June 1, after BTC fell 7.6% in less than six hours and the price fell below $ 30,000. This negative move coincided with the launch by the US Federal Reserve of the process to reduce its balance sheet by $ 9 trillion.

On June 2, former BitMEX exchange CEO Arthur Hayes claimed that Bitcoin’s low could be a strong signal. Using the data on a chain, Hayes predicts strong support at $ 25,000, since $ 69,000 marked the highest ever level of this cycle, down 64%.

Analysts may issue optimistic price forecasts, but the threat of regulation continues to limit investor optimism. Another blow was dealt on June 2 when the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Gemini Trust Co for allegedly misleading statements in 2017 regarding a self-certified valuation of a bitcoin futures contract.

On June 7, a bill was introduced in the Russian parliament to ban digital assets as payment. The bill clearly defines digital financial assets as “electronic platforms”, which can be identified as the subjects of the national payment system and which are required to be submitted to the central bank register.

The bulls placed their bets at $ 32,000 and above

The open interest for the June 10 options expiration is $ 800 million, but the actual figure will be much lower because the bulls were overly supportive. The massive rise to $ 32,000 on May 31 may have plagued these traders, with up to $ 50,000 pledged for Friday’s day option.

Global bitcoin options open interest for June 10th. Source: CoinGlass

The call-to-send ratio of 0.94 represents the balance between the 390 million call options and the 410 million placed options. Currently, bitcoin sits near $ 30,000, which means that most bullish bets are likely to fall worthless.

If the bitcoin price falls below $ 30,000 at 8:00 UTC on June 10, these call options will only be available for up to $ 20 million. The reason for this difference is that the right to buy bitcoin for $ 30,000 is unused if bitcoin is trading below that expiring level.

The bears target a level of under $ 29,000 for a profit of $ 205 million

Here are the four most likely scenarios based on current prices. The number of option contracts available on June 10 for buy (bullish) and sell (bearish) instruments varies depending on the expiration price. Inequality in favor of all sides equals theoretical profit:

  • Between $ 28,000 and $ 29,000 : 50 call options for 7,400 call options. The net return in favor of (bearish) selling instruments is under $ 205 million.
  • Between $ 29,000 and $ 30,000 : 700 call options compared to 5,500 call options. The net return in favor of the bears is $ 140 million.
  • Between $ 30,000 and $ 32,000 : 3,700 call options for 3,400 call options. The bottom line is balanced between bulls and bears.
  • Between $ 32,000 and $ 33,000 : 7,700 call options for 750 call options. The net yield in favor of (bullish) instruments is under $ 220 million.

This rough estimate considers placing options used in bearish bets and call options exclusively in neutral trades or even bullish trades. Nevertheless, this oversimplification does not take into account more complex investment strategies.

For example, a trader may have a sell option, which could get a positive exposure for bitcoin above a certain price, but unfortunately there is no easy way to estimate this effect.

Also read: “Can it be made simpler? »Bitcoin whales decide when to buy and sell BTC

Bulls will try to keep BTC above $ 30,000

Bitcoin bulls must push the price above $ 30,000 on June 10 to avoid a $ 140 million loss. On the other hand, Bears’ best case needs a pressure of less than $ 29,000 to maximize their gains.

The bitcoin bulls only liquidated $ 200 million in long leverage positions on June 6, so they should need less margin to push the price higher. That said, there is no doubt that the bears will try to push BTC below $ 30,000 before the options expire on June 10th.

These are the only views and opinions expressed hereauthor and do not necessarily reflect the views of Cointelegraph. All investments and trades involve risk. You should do your own research before making a decision.

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