Bitcoin Bulls Urged to Surpass $64,000 As $9.25 Billion Options Set to Expire on June 28
Summary:
Bitcoin (BTC) options worth $9.25 billion are set to expire on June 28, 2024, marking a significant event as it wraps up the first half of the year. The dip in value of tech giant NVidia and weak macroeconomic data favor Bitcoin bulls. However, if Bitcoin's price remains under $65,000 by June 28, only $440 million of the call options will partake in the expiry. Bitcoin bulls need to push beyond $64,000 to avoid potential losses.
Bitcoin (BTC) options worth $9.25 billion are set to lapse on the morning of June 28. This expiry is significant as it denotes the close of the first half of 2024 and is historically the second grandest expiry in all markets, inclusive of traditional finance. Investors' woes are heightened by NVidia, the tech company valued at $3 trillion, whose stock fell by 12% since June 20's record high. This slip in Bitcoin has shifted $430 million in favor of bears.
Following the Bitcoin halving two months ago, 57% of optimistic bets were calculated at $70,000 or more. Contrarily, market fragility in the past fortnight has plunged these call (buy) options into worthlessness. If Bitcoin hovers around $61,500 on the morning of June 28, the entitlement to purchase BTC at $62,000 and $64,000 will be absent from the expiry. Similarly, put (sell) options at $58,000 and $60,000 will also be void.
Bitcoin optimists can find reassurance in weakening macroeconomic data, which may prompt stronger rate slashing and fiscal stimulus actions from the US Federal Reserve and Treasury. In May, new U.S. single-family home sales dipped to the lowest in six months, 11.3% less than the previous year. Worrisome is the fact that at the current rate of sales, it would take 9.3 months to deplete the inventory of new homes, a rise from 8.1 months in April.
A report from Charles Schwab on June 24 highlighted similarities in current financial market dynamics to those in 2021, possibly a harbinger of a bear market. Contributing to these fears is a growing gap between the S&P 500 and equally weighted indices, spearheaded by artificial intelligence stocks. Analysts have determined that while there's no immediate risk to the bull market, more participants will need to partake for its continuation.
Deribit currently leads the June BTC options market with $6.65 billion in open interest. The next best, the Chicago Mercantile Exchange (CME) has $1.15 billion in open interest, followed by OKX with $735 million and Binance with $520 million. Adding it all up, the Bitcoin call and put options for June 28 amount to $9.25 billion; a significant figure made larger by overly optimistic call options.
The 0.51 put-to-call ratio shows a disproportion between the call open interest ($4.4 billion) and the put options ($2.25 billion). If Bitcoin's value remains under $65,000 on the morning of June 28, only $440 million of these call options will be part of the expiry.
For Bitcoin optimists to steer clear of losses, the value needs to surpass $64,000. Based on current trends, four potential scenarios for varying settlement prices on June 28 could take place:
- Between $57,000 and $60,000: 660 calls against 14,850 puts. The net effect leans towards put (sell) options by $820 million.
- Between $60,000 and $62,000: 3,910 calls against 11,140 puts. The net effect leans towards put (sell) options by $430 million.
- Between $62,000 and $64,000: 5,220 calls against 8,690 puts. The net effect leans towards put (sell) options by $215 million.
- Between $64,000 and $66,000: 6,880 calls against 6,940 puts. The result hangs equally between call and put options.
These scenarios are simplistic assumes that bullish bets primarily use call options and neutral-to-bearish strategies use put options. These don't account for more complex strategies.
In essence, to prevent a likely outcome of $820 million favoring put options at Deribit, Bitcoin optimists must maintain support of $60,000 before the expiry on June 28.
This article does not offer investment advice or recommendations. All investments and trading moves carry risk and readers ought to conduct their own research prior to taking action.
Published At
6/27/2024 12:30:00 AM
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