Bears aim for $ 60K gold in the bitcoin options market

Bitcoin (BTC) has completely gotten out of the downtrend that drove the crypto money to the $ 53k support. The rise of BTC to $ 57,500 has eased the pressure on the bulls from the May 7 expiry date in the options market.

The sudden recovery of cryptocurrency may be due to the New Digital Investment Group (NYDIG) announcing that it is partnering with Fidelity National Information Services (FIS) to create a framework for US banks to offer crypto trading services.

Patrick Sells, Head of Banking Solutions at NYDIG, told CNBC that some banks have already signed up for the program.

Whatever the reason, the bulls were greatly relieved as the due date approached.

The rate of contracts can be misleading

Total open positions of BTC options expiring on May 7. Source: Bybt

Since option investors pay the premium upfront, they do not face the risk of liquidation. Call options protect against potential increases, while put options protect against potential price drops.

In other words, investors who expect a decrease in price or are neutral turn to put options, while those who think the price will increase prefer call options.

Although the ratio of put / buy contracts in options expiring on Friday seems balanced at first glance, these contracts will expire after about 24 hours, that is, call options of $ 65,000 and above will become worthless.

Similarly, it will be unreasonable for put options below $ 48,000 to be traded. Therefore, in order to correctly interpret the possible impact of the May 7 maturity date, contracts with transaction prices that are far from the current spot price should be ignored.

The advantage is in the bulls with $ 104 million

There are 4,950 ($ 285 million) call options in total up to $ 60,000, and this number will increase by 1,620 ($ 93 million) if BTC reaches $ 64,000 by May 7.

It was seen that the number of put options up to $ 54 thousand was 3,150, with the total of open positions being $ 181 million. If the BTC price decreases to $ 50,000 by the due date, this number will increase to 2,800 ($ 161 million).

While the bulls have an advantage of $ 104 million, this number could decrease drastically at all levels below $ 60k, as most call options (1,680 contracts) are at $ 60k.

Therefore, bears may try to keep the price below $ 60k until May 7.

The opinions and views expressed herein are those of the author alone and do not reflect the views of Cointelegraph. Every investment involves risk. Do your own research before making a decision.

Check Also

Bitcoin could see below 30,000 if stocks stumble

The stock market crash is on its way to spread to Bitcoin (BTC) once again. …

Leave a Reply

Your email address will not be published. Required fields are marked *