Takeaways from the conference:
- The June 26 expiry is dominated by put (sell options) with net benefits ranging between $1B and $3.4B. This leaves bulls vulnerable.
- Strategy is buying BTC yet again. But, heavy calls (buys) positions above $72,000 are likely to strengthen the downward momentum.
On June 26th, $13 billion worth of Bitcoin (BTC), open interest options will expire. This could give bears new ammunition to put more downward pressure on BTC’s price. Bitcoin’s 14 percent price fall in June thus far caught the bulls off guard, because most of their call (buying options) were priced at more than $68,000. Can this expiry month open the doors for a recovery in July?
Deribit’s options are the most popular, with $10.4 Billion in open interest. That represents 79% of all market shares. OKX comes in at second place with 6%. Binance is next at 5%, CME at 5 %, and Bybit has 4%. Look at the position of Deribit traders ahead of monthly expiry.
Deribit BTC is open to Bitcoin options for June 26, BTC. Source: Deribit
Deribit has a total call option open interest of $6 billion. 78% is at least $72,000. The effective open interest is likely to shrink rapidly with less than one week left. Only 28% of the $4.5 Billion in open put (sell options) interest is dependent upon Bitcoin’s falling below $57,000. The bulls are disadvantaged by this setup.
The wrong strategy and US regulations was adopted by Bitcoin bulls
The bulls are largely blaming the aggressive BTC purchases made by Strategy (MSTR US), in April and may. It added 62.841 BTC within four weeks to help push the price above $73,000. However, sentiment weakened as US listed spot Bitcoin ETFs dropped. outflows kick off in mid-May.
Weekly net flows of US-listed Bitcoin ETFs, USD. Source: SoSoValue
The Digital Asset PARITY Act has also been unable to pass quickly in the United States. It would have exempted the mining and stake rewards until they were sold from taxation. Markets took another blow from Strategy’s sale of 32 BTC Even as the enthusiasm for tech stocks grew following Google’s cash raise (GOOG US), Nvidia’s (NVDA US) raised,
Related: Bitcoin decouples from tech stocks–Is $60K BTC’s next stop?
The bulls have time to trim their losses but the puts are clearly in a better position right now. Based on the current market trends, here are four scenarios that could play out for Deribit’s BTC option expiry this Friday:
- If you buy a put instrument between $57,000-$61,000, the net effect is $3.4 billion in favor of selling it.
- Put (sell) Instruments are more profitable between $61,001-$65,000.
- In the range of $65,001-$69,999: $1.7bn in net profit favors put instruments (sell instruments).
- If you spend between $69,001-$71,000 on a put or sell instrument, the net effect is a $1 billion advantage.
The June expiry will still not be in the favor of the calls, even if there is a rally by 12%. This doesn’t guarantee bear control in July but the outcome of the June expiry will likely weigh on the bullish sentiment going into the next month.
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Source: cointelegraph.com
