The expiration of $10.5 billion in Bitcoin options may reset market expectations

The key takeaways

• Bitcoin bulls must rally by 9% to get the upper hand in the $10.5billion options expiry on Friday.

• Bitcoin’s 90% correlation with the Nasdaq 100 Index demonstrates that investor confidence is driven by tech investors.

BitcoinBTC( price) surged up to an 8-day high, forming a successful double bottom around the $62,500 mark. Bitcoin remains 21% less expensive than one month earlier, despite recent gains. Bulls may not come out on top during the expiration of BTC options worth $10.5 Billion this Friday. Bulls may be able turn the tables and reverse momentum at the last-minute.

Deribit is still the market leader, with 76% of all options. This includes $4.5 billion worth of call (buying) options as well as $3.4 billion worth in sell (put) instruments. OKX comes in at second with 610 million dollars in calls, and 385 million dollars in puts. This represents 10% of the total. CME finished third with 255 million calls and 287 million puts for a share of the market of 5%.

Even though there is less interest in open options, put options have a better position.

The aggregate open interest of put options appears to be 25% less than the equivalent call options at first glance. The more detailed view shows that those with neutral or bullish positions were surprised by the sharp drop of Bitcoin below $75,000 early in February. Call options for Deribit expire useless if Bitcoin’s price falls below $75,000 on Friday.

If you discard calls that are usually targeted at $105,000 or higher complex multi-leg strategies Due to the lower costs of acquisition, 37% less bets fall below $75,000. This puts Deribit’s effective open interest in call options at around $780 million. It is important to analyze whether the bearish traders are now playing their cards too much in light of these conditions.

Deribit’s open interest in $1.44 billion of put options targets Bitcoin prices under $60,000 although bets between $40,000 and $45k are unlikely to have targeted those exact levels. Calendar strategies, ratio spreads and extreme targets are usually associated with calendar strategies. They do not need a sudden price drop to make them profitable.

Deribit’s open interest in put options is $1.15 billion, more than enough for existing call option holders. Bitcoin’s fall toward $60k was not likely tied to macroeconomic trendsIt is important to not understate the importance of Nvidia’s (NVDA US), earnings result after US markets closed on Wednesday.

Every risk market is influenced by the success of artificial intelligence, and in particular the operational margins that are sustainable for the largest corporations. Bitcoin and the stock exchange have a short-term correlation, according to history. However, the performance of the stock exchange could determine the outcome of the $10.5 billion in options that expire on Friday.

Related: Bitcoin tops $69.5K after stock market rebound, strong earnings data boost risk appetite

Put options continue to be the most advantageous as long as the Bitcoin price is below $75,000.

Here are the three most likely outcomes of Deribit’s BTC expiry on Friday based upon current prices:

• The price range is from $65,000 up to $69,000 This net result is $1.15 Billion in favor of the sell (put) instruments.

• Between $69,001 and $71,000 This net result is $845,000,000 in favour of put instruments (sell).

• You can now get a $74,000 raise from $71,001: This net result is $470,000,000 in favour of put instruments (sell).

Bitcoin bulls will need to see a rally of 9% from their current $68,800 price level in order to win the options expiry for February.