Options data shows Bitcoin’s short-term uptrend is at risk if BTC falls below $23K

Bitcoin (BTC) briefly broke above $25,000 on Aug. 15, however the pleasure lasted lower than an hour and was adopted by a 5% retrace within the subsequent 5 hours. The resistance stage proved to be more durable than anticipated however might have given bulls false hope for the upcoming $335 million weekly choices expiry.

Buyers’ fleeting optimism reverted to a sellers’ market on Aug. 17 after BTC dumped and examined the $23,300 assist. The damaging transfer came about hours earlier than the discharge of the Federal Open Markets Committee (FOMC) minutes from its July assembly. Buyers count on some insights on whether or not the Federal Reserve will proceed elevating rates of interest.

The damaging newsflow accelerated on Aug. 16 after a federal courtroom in the USA licensed the U.S. Inner Income Service (IRS) to pressure cryptocurrency dealer SFOX to disclose the transactions and identities of consumers who’re U.S. taxpayers. The identical technique was used to acquire info from Circle, Coinbase and Kraken between 2018 and 2021.

This motion explains why betting on Bitcoin value above $25,000 on Aug. 19 appeared like a certain factor a few days in the past, and this may have incentivized bullish bets.

Bears did not count on BTC to maneuver above $24,000

The open curiosity for the Aug. 19 choices expiry is $335 million, however the precise determine shall be decrease since bears had been overly-optimistic. These merchants might need been fooled by the short-lived dump to $22,700 on Aug. 10 as a result of their bets for Aug’s choices expiry lengthen right down to $15,000.

Bitcoin choices mixture open curiosity for Aug. 19. Supply: Coinglass

The 1.29 call-to-put ratio reveals the distinction between the $188 million name (purchase) open curiosity and the $147 million put (promote) choices. At present, Bitcoin stands close to $23,300, that means most bullish bets are prone to turn out to be nugatory.

If Bitcoin’s value strikes beneath $23,000 at 8:00 am UTC on Aug. 19, solely $1 million value of those name (purchase) choices shall be out there. This distinction occurs as a result of a proper to purchase Bitcoin at $23,000 is ineffective if BTC trades beneath that stage on expiry.

There’s nonetheless hope for bulls, however $25,000 appears distant

Under are the three almost certainly eventualities primarily based on the present value motion. The variety of choices contracts out there on Aug. 19 for name (bull) and put (bear) devices varies, relying on the expiry value. The imbalance favoring both sides constitutes the theoretical revenue:

  • Between $21,000 and $23,000: 30 calls vs. 2,770 places. The web end result favors the put (bear) devices by $60 million.
  • Between $23,000 and $25,000: 940 calls vs. 1,360 places. The web result’s balanced between bulls and bears.
  • Between $25,000 and $26,000: 3,330 calls vs. 100 places. The web end result favors the decision (bull) devices by $80 million.

This crude estimate considers the put choices utilized in bearish bets and the decision choices solely in neutral-to-bullish trades. Even so, this oversimplification disregards extra advanced funding methods.

For instance, a dealer might have offered a put possibility, successfully gaining constructive publicity to Bitcoin above a selected value, however sadly, there isn’t any simple solution to estimate this impact.

Associated: Former Goldman Sachs banker explains why Wall Street gets Bitcoin wrong

Bears will try to pin Bitcoin below $23,000

Bitcoin bulls need to push the price above $25,000 on Aug. 19 to profit $80 million. On the other hand, the bears’ best case scenario requires pressure below $23,000 to maximize their gains.

Bitcoin bulls just had $144 million in leveraged futures long positions liquidated on Aug. 16, so they should have less margin to drive the price higher. With this said, bears have the upper hand to suppress BTC below $23,000 ahead of the Aug. 19 options expiry.

The views and opinions expressed here are solely those of the author and don’t essentially mirror the views of Cointelegraph. Each funding and buying and selling transfer entails danger. It is best to conduct your personal analysis when making a call.