Bitcoin options data points to an interesting outcome after this week’s $1.9B expiry

The upcoming $1.9 cardinal Bitcoin (BTC) monthly options expiry connected Aug. 25 is cardinal to defining whether the $26,000 enactment level volition hold. One could pin the caller cryptocurrency marketplace sell-off to the U.S. Securities Exchange Commission decision to hold the spot Bitcoin exchange-traded funds (ETF), but there’s besides the macroeconomic perspective.

If the U.S. Federal Reserve's efforts to curb ostentation work, it's probable that the inclination of a stronger U.S. dollar volition persist. This was evident arsenic the Dollar Strength Index (DXY), a measurement of the dollar against different currencies, reached its highest level successful 76 days by August 22.

To forestall a imaginable nonaccomplishment of $380 cardinal owed to the monthly BTC options expiry, Bitcoin bulls indispensable guarantee Bitcoin's terms trades supra $27,000 by August 25.

Bitcoin bears volition payment from the menace of harsh regulation

Cryptocurrency bulls person encountered regulatory challenges lately. This is evident arsenic the apical 2 cryptocurrency exchanges, Binance and Coinbase, are presently entangled successful lawsuits with the SEC. Additionally, the archetypal triumph celebrated by Ripple against the SEC is present under entreaty by the regulatory body.

Adding to these developments, Bitstamp speech precocious revealed its decision to halt staking services for U.S.-based clients. A pivotal interest wrong the ongoing U.S. regulatory scenery revolves astir the classification of ETH arsenic either a commodity oregon a security.

Furthermore, Binance speech has communicated the suspension of its crypto debit paper offerings crossed Latin America and the Middle East. This determination follows allegations of Binance besides suspending Euro withdrawals and deposits done SEPA connected August 20. The speech clarified that determination is nary definite timeline for reinstating the service.

Data shows bulls were excessively optimistic connected Bitcoin price

The unfastened involvement for the options expiry connected August 25 stands astatine $1.9 billion. However, it's projected that the last magnitude volition beryllium little owed to definite traders foreseeing terms levels reaching $29,000 oregon adjacent higher. The unexpected 12% correction successful Bitcoin's terms from August 14 to August 19 surely took bullish investors disconnected guard, arsenic evident from the Deribit Bitcoin options involvement chart.

Deribit Bitcoin options aggregate unfastened involvement for July 28. Source: Deribit

The 0.56 put-to-call ratio reflects the imbalance betwixt the $1.2 cardinal successful telephone (buy) unfastened involvement and the $685 cardinal successful enactment (sell) options. However, if Bitcoin’s terms remains adjacent $26,500 astatine 8:00 americium UTC connected Aug. 25, lone $35 cardinal worthy of these telephone (buy) options volition beryllium available. This quality happens due to the fact that the close to bargain Bitcoin astatine $27,000 oregon $28,000 is useless if BTC trades beneath that level connected expiry.

Bitcoin bears purpose for sub-$26,000 to maximize their gains

Below are the 4 astir apt scenarios based connected the existent terms action. The fig of options contracts disposable connected Aug. 25 for telephone (buy) and enactment (sell) instruments varies depending connected the expiry price. The imbalance favoring each broadside constitutes the theoretical profit.

This crude estimation disregards much analyzable concern strategies. For instance, a trader could person sold a telephone option, efficaciously gaining antagonistic vulnerability to Bitcoin supra a circumstantial price. Unfortunately, there’s nary casual mode to estimation this effect.

• Between $25,000 and $26,000: 100 calls vs. 15,100 puts. The nett effect favors the enactment instruments by $380 million.
• Between $26,000 and $27,000: 1,400 calls vs. 11,000 puts. The nett effect favors the enactment instruments by $250 million.
• Between $27,000 and $28,000: 4,000 calls vs. 8,400 puts. The nett effect favors the enactment instruments by $110 million.
• Between $28,000 and $29,000: 6,000 calls vs. 5,300 puts. The nett effect is balanced betwixt telephone and enactment options.

Take enactment that for the bulls to level the playing tract earlier the monthly expiry, they indispensable execute a 6% terms summation from $26,400. In contrast, the bears lone necessitate a humble 2% correction beneath $26,000 to unafraid a $380 cardinal vantage connected August 25.

Given Bitcoin's repeated drops beneath the $26,000 enactment level from August 21 to August 23, it wouldn't beryllium astonishing if this level was tested again earlier the options expiry. Furthermore, considering the existent cryptocurrency regulatory landscape, there's minimal inducement for Bitcoin bulls to reverse the prevailing bearish momentum aft the $1.9 cardinal monthly options expiry.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.