Bitcoin bears attempt to pin BTC price under $23K ahead of this month’s options expiry

Bitcoin's (BTC) 16% terms summation betwixt Feb. 13 and Feb. 16 practically extinguished the bears' anticipation for a monthly options expiry beneath $21,500. As a effect of the abrupt rally, these bearish bets are improbable to wage off, particularly since the expiry occurs connected Feb. 24. However, bulls were not counting connected the beardown terms rejection astatine $25,200 connected Feb. 21 and this reduces their likelihood of securing a $480 cardinal nett successful this month’s BTC options expiry.

Bitcoin investors' superior interest is simply a stricter monetary argumentation arsenic the U.S. Federal Reserve (FED) increases involvement rates and reduces its $8 trillion equilibrium sheet. Feb. 22 minutes from the latest Federal Open Market Committee's (FOMC) gathering showed that members were successful statement connected the astir caller 25 bps complaint hike and that the FED is consenting to proceed raising rates arsenic agelong arsenic deemed necessary.

St. Louis FED President James Bullard told CNBC connected Feb. 22 that a much assertive involvement complaint hike would springiness them a amended accidental to incorporate inflation. Bullard said,

If confirmed, the accrued involvement complaint gait would beryllium antagonistic for hazard assets, including Bitcoin, arsenic it draws much profitability for fixed-income investments.

Even if the newsflow remains negative, bulls inactive tin nett up to $480 cardinal successful Friday's monthly options expiry. However, bears tin inactive importantly amended their concern by pushing the BTC terms beneath $23,000.

Bears were not expecting Bitcoin to clasp $22,000

The unfastened involvement for the Feb. 24 monthly options expiry is $1.91 billion, but the existent fig volition beryllium little since bears expected prices beneath $23,000. Nevertheless, these traders were amazed arsenic Bitcoin gained 13.5% betwixt Feb. 15 and Feb. 16.

Bitcoin options aggregate unfastened involvement for Feb. 24. Source: CoinGlass

The 1.55 call-to-put ratio reflects the imbalance betwixt the $1.16 cardinal telephone (buy) unfastened involvement and the $750 cardinal enactment (sell) options. If Bitcoin's terms remains adjacent $24,000 astatine 8:00 americium UTC connected Feb. 24, lone $125 cardinal worthy of these enactment (sell) options volition beryllium available. This quality happens due to the fact that the close to merchantability Bitcoin astatine $22,000 oregon $23,000 is useless if BTC trades supra that level connected expiry.

Bulls purpose for $23,000 to unafraid a $155 cardinal profit

Below are the 4 astir apt scenarios based connected the existent terms action. The fig of options contracts disposable connected Feb. 17 for telephone (bull) and enactment (bear) instruments varies, depending connected the expiry price. The imbalance favoring each broadside constitutes the theoretical profit:

• Between $22,500 and $23,000: 12,500 calls vs. 10,700 puts. The nett effect favors the telephone (bull) instruments by $40 million.
• Between $23,000 and $24,000: 16,200 calls vs. 7,600 puts. The nett effect favors the telephone (bull) instruments by $200 million.
• Between $24,000 and $24,500: 21,100 calls vs. 5,200 puts. Bulls summation their vantage to $385 million.
• Between $24,500 and $25,000: 23,200 calls vs. 3,600 puts. Bulls predominate by profiting $480 million.

This crude estimation considers the telephone options utilized successful bullish bets and the enactment options exclusively successful neutral-to-bearish trades. Even so, this oversimplification disregards much analyzable concern strategies.

For example, a trader could person sold a telephone option, efficaciously gaining inverse vulnerability to Bitcoin supra a circumstantial price, but unluckily there's nary casual mode to estimation this effect.

Related: US lawmaker introduces measure aimed astatine limiting Fed’s authorization connected integer dollar

The FED's tightening argumentation is the bears’ champion shot

Bitcoin bulls indispensable propulsion the terms supra $24,500 connected Feb. 24 to unafraid a imaginable $480 cardinal profit. On the different hand, the bears' best-case script requires a 3.5% terms dump beneath $23,000 to minimize their losses.

Considering the antagonistic unit from the FED's tendency to weaken the system and incorporate inflation, bears person bully likelihood of improving their concern and settling with a $40 cardinal nonaccomplishment connected Feb. 24. This question mightiness not beryllium successful, but it is bears' lone mode retired of multi-million losses connected the BTC monthly options expiry.

Looking astatine a broader clip frame, investors inactive judge the FED is destined to reverse the existent monetary argumentation successful the 2nd fractional of 2023 — perchance paving the mode for a sustainable rally up of the April 2024 Bitcoin artifact reward halving.

The views, thoughts and opinions expressed present are the authors’ unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.

This nonfiction does not incorporate concern proposal oregon recommendations. Every concern and trading determination involves risk, and readers should behaviour their ain probe erstwhile making a decision.