Unraveling Bitcoin’s Market Position Ahead of $1.35 Billion BTC Options Expiry
Summary:
With Bitcoin's failure to sustain a price above $65,000 on May 6, experts analyse whales' positioning in Bitcoin derivatives markets ahead of the May 10 expiry of $1.35 billion BTC options. BTC options metrics show no apparent trap set by bearish speculators and no unusual demand between put and call instruments. Despite lower demand for put options, they face fewer risks, especially if Bitcoin remains below $64,000. However, a balanced impact at $62,000 indicates no unexpected price changes.
Significant shifts in Bitcoin's (BTC) value tend to prompt experts and traders to seek a rationale, with prime suspects being the derivatives markets, where it's claimed bearish speculators capitalize on futures contract liquidation thresholds or aspire to heighten gains stemming from weekly BTC options expiries. This theory has waned of late due to the Bitcoin's stable price range. However, whispers of a trend reversal have resurfaced, prompting an examination of the positioning of major players in the Bitcoin derivatives markets. Might volatility arise from the forthcoming May 10 expiry of $1.35 billion BTC options?
A noteworthy instance of shifting blame to the weekly options expiry occurred when a failure to sustain prices over $65,000 on May 6 sparked the recent diminishing trend. If BTC derivatives metrics support this claim, further price lowerings may be anticipated ahead of the scheduled May 10 expiry at 8:00 am UTC.
Analyzing from a broader standpoint, the open interest of $1.35 billion options appears significant enough to rationalize the efforts of bearish Bitcoin speculators. A more granular exploration, however, unveils a divergent narrative. For the discussed expiry on May 10, Deribit commands an 84% market dominance, hence the majority of data derive from that platform. The analysis omits the Chicago Mercantile Exchange (CME) since it only hosts monthly contracts.
Notably, when evaluating call (purchase) and put (sell) options, an imbalance is often present, a customary attribute for such instruments, irrespective of the underlying asset. This introduces the likelihood of volume discrepancies between instruments, with proliferating demands for puts often indicating bearish markets.
Recent data reveals that over the past 10 days, the average BTC options put-to-call volume at Deribit was 0.60, suggesting 40% less volume for put (sell) instruments relative to call (buy) options. This has been standard over the past month, thus tenuous claims really can’t be made about bearish actors setting a trap or predicting Bitcoin's inability to maintain $65,000 on May 6.
Nevertheless, not all call options buyers should be considered fully credible, particularly with fewer than 13 remaining hours before the May 10 expiry. Outlandish justifications for acquiring Bitcoin at $74,000 and even $90,000 within such brief timespans are a stretch, hence these excessively hopeful wagers should be disregarded when assessing open interest.
Although the put-to-call ratio manifests a Put option demand that is 35% lower, bears are less exposed to risk since most call orders were staked at $63,000 and above. In truth, call options below this value result in an open interest total of $91 million, which indicates that 87% could prove futile on May 10. Conversely, upholding $64,000 support would result in the open interest for call options exceeding the put orders by $115 million, a win for Bitcoin bulls.
While Bitcoin remaining above $65,000 would have saved bearish investors formidable losses, this doesn't imply they'll ultimately reign victorious. Put options set at or above $61,500 share an open interest of $104 million, just enough to equate the odds. To secure a $100 million edge, bears would need Bitcoin valued beneath $61,000, their ideal circumstance.
There's no evidence to suggest that bearish actors leveraged additional BTC options in hopes of profiting from a price plunge before the May 10 expiry. No unexpected fluctuation occurred between put and call instruments, nor a specific price point particularly beneficial to bears. Whatever tactics were employed, they led to an apparent balanced influence at $62,000, hinting at no unexpected price shifts.
Published At
5/9/2024 10:58:58 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.