Bitcoin (BTC) faced a 7.3% drop as it tested the $15,500 support on November 20-21. While the adjustment seems small, the move liquidated him by $230 million in futures contracts. As a result, leveraged bulls are unprepared for the $1.14 billion monthly option that expires on November 25th.
Bitcoin investor sentiment soured after Genesis Trading, part of the Digital Currency Group (DCG) conglomerate, suspended payments to its crypto lending division on Nov. 16. Grayscale Bitcoin Trust (GBTC), the largest institutional Bitcoin investment vehicle.
Additionally, Bitcoin miner Core Scientific has warned that there is “considerable doubt” about its continued operations over the next 12 months given financial uncertainties. In its quarterly report filed with the U.S. Securities and Exchange Commission (SEC) on Thursday, the company reported a net loss of $434.8 million for the third quarter of 2022.
Meanwhile, New York Attorney General Letitia James sent a letter to members of Congress on Nov. 22, banning cryptocurrency purchases using IRA funds and defined contribution plans such as 401(k) and 457 plans. recommended.
Despite the best efforts of the bulls, Bitcoin has failed to close above $17,000 since November 11th. The move explains why his $1.14 billion Bitcoin monthly option expires on November 25th. .
Most bull bets are above $18,000
Bitcoin surged 27.4% after failing to break the $21,500 resistance on November 5, which surprised the bulls. This is because only 17% of monthly expiring call (buy) options are below $18,000. Therefore, the bears are in a better position even if they bet less.
1.14 A broader view using the call-to-put ratio shows a more bullish bet as the call (buy) open interest is $610 million against the $530 million put (sell) option . Nonetheless, Bitcoin is down 20% in his November, making most bullish bets likely worthless.
For example, if the Bitcoin price falls below $17,000 on November 25th at 8:00 AM UTC, these call (buy) options will only be available for $53 million worth. This difference occurs because the right to buy Bitcoin above $17,000 is meaningless if Bitcoin trades below $17,000 at expiration.
Bears could secure a profit of $245 million
Below are the four most likely scenarios based on the current price action. The number of call (bullish) and put (bearish) option contracts available on November 25 depends on the expiry price. An imbalance in favor of both sides constitutes a theoretical gain.
- $15,000 – $16,000: 200 calls and 16,000 puts. Net income favors the bears by $245 million.
- $16,000 – $17,000: 3,200 calls versus 11,900 puts. Net earnings favor the bears at $145 million.
- $17,000 – $18,000: 5,600 calls versus 8,800 puts. The bears are still dominant, with a profit of $55 million.
- Between $18,000 and $18,500: 9,100 calls versus 6,500 puts. The net result favors the bulls by $50 million.
Related: Bitcoin Price Holds $16,000 As Analysts Say Bitcoin Fundamentals Are “Still”
This rough estimate takes into account call options used in bullish bets and put options used in neutral to bearish trades only. Yet this oversimplification ignores more complex investment strategies.
Bitcoin bulls need to push the price above $18,000 on Nov. 25 to turn the tables and avoid a potential $245 million loss. However, bitcoin bulls recently liquidated a long position in leveraged futures worth $230 million, so there isn’t much to push the price higher in the short term. That said, the most likely scenario on Nov. 15 is that the $15,000 to he will give the bears a decent win in the $17,000 range.
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