Here’s why Bitcoin bulls could trample $ 50,000 before $ 2 billion BTC options expire on Friday

[ad_1]

Bitcoin options (BTC) worth $ 2 billion will expire on Friday, August 27. Some analysts argue that strong call (call) activity on August 22 was likely the catalyst for the recent $ 50,000 price test.

Digital asset trading firm QCP Capital mentioned in its market update that an entity has “consistently pushed prices (of options) up over the past few weeks.” The activity, which took place during the morning trading session in Asia, aggressively bought bullish options in chunks of 100 BTC contracts each.

The report also mentions the exhaustion of short-term regulatory concerns, as the crypto-related decisions of the Senate Banking Committee and Regulators are unlikely to bear fruit in 2021.

Bears could analyze different data

However, the most recent report “The Week On Chain” by blockchain analytics provider Glassnode included data regarding Bitcoin on-chain activity. This analysis revealed that the amount of transactions adjusted to the entity did not respond to the ongoing bullish action.

Additionally, Decentrader, a market-based crypto-intelligence provider, highlighted insufficient trading volume during this recent decision to push the price of BTC above $ 52,000.

Bitcoin options combine open interest for the month of August. 27. Source: Bybt.com

Friday will be an important test of the $ 50,000 level, as 4,372 BTC option contracts await the $ 218 million decision.

Initial call-to-put analysis shows the vast dominance of neutral to bullish buying instruments, with open interest 60% greater. Still, the Bulls may have been overly bullish, as 68% of their bets were placed at $ 50,000 or more.

Related: Bitcoin Rejects $ 51,000 After Michael Saylor Reveals New BTC Buy What’s Next?

91% of put options will likely be worthless at expiration

On the other hand, 91% of protective puts were placed at $ 46,000 or less. These neutral to bearish instruments will become worthless if Bitcoin trades above this price on Friday. Options expiration occurs at 8:00 UTC, so additional volatility is expected ahead of the event.

Below are the four most likely scenarios, given current price points. The imbalance in favor of either side represents the potential profit from the expiration as call (call) options are more frequently used in bullish strategies, while protection options are used in neutral to bearish trades.

Below $ 45,000: 4,040 calls against 2,500 puts. The net result is a $ 69 million advantage for neutral to bullish instruments. Above $ 46,000: 6,500 calls against 1,300 put options. The net result is $ 239 million in favor of neutral to bullish instruments. Above $ 48,000: 7,400 calls against 420 puts. The net result is a $ 335 million advantage for neutral to bullish instruments. Above $ 50,000: 12,000 calls against 35 puts. The net result is a $ 600 million advantage for neutral to bullish instruments.

The data above shows how many contracts will be available on Friday, based on the expiration price. There is no way to measure the bottom line for each market player, as some investors might trade more complex strategies, including market neutral strategies using both call options and call options. protective sales.

These two competing forces will show their strength as the bears try to minimize the damage. Either way, the bulls have full control over the Friday expiration, and there seems to be enough incentive for them to defend the $ 48,000 level and even attempt a bigger gain by pushing the price above $ 50,000.

Meanwhile, the bears should focus on the September expiration, keeping in mind that El Salvador is expected to introduce Bitcoin as legal tender next month. In addition, the country is building the infrastructure to support a state-issued Bitcoin wallet called Chivo.

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

[ad_2]