The key takeaways
- Bears have a big advantage ahead of the expiration on Friday, when $9 billion in options will be available. This is especially true if Bitcoin stays under $74,000.
- The market is pessimistic due to the spot Bitcoin ETF withdrawals, and reductions in corporate BTC holdings.
Bitcoin (BTC), for the first six-week period, tested the $72,500 mark on Thursday. This triggered $342,000,000 in liquidations of bullish leveraged position. Although the price bounced up to $73,500 in relief, traders worry that they will still be under control as a result of the monthly option expiry. This is due to $9 billion.
Deribit BTC is now accepting Friday Bitcoin Call (Buy) Options. Source: Deribit
Deribit has a market share of 70% for the monthly option expiry in May. It captured $3.4 billion worth of open interest (buying) for calls and $2.91 for put (selling). The bulls however were taken by surprise when Bitcoin dropped below $78,000.
Call options worth $306 millions will be in the black if Bitcoin remains below $74,000 at Friday’s expiration. Put options with a target of $74,000 and higher are worth $1.05 billion. This gives the bearish strategy a huge advantage.
Deribit BTC has opened interest for Friday Bitcoin puts (sell options). Source: Deribit
Put options would still be worth $265 millions more than call instruments, even if Bitcoin recovered $74,000 on Friday. There is a positive side to this: there’s no excess demand for protection against the downside right now. Put options volumes typically increase only when traders expect severe negative surprises.
Bitcoin put-to call volume, US Dollars. Source: Laevitas
Bitcoin’s put-tocall ratio on Thursday was at 0.8, with $1.57B traded in calls and $1.29B in puts. The neutrality of the setup is an improvement over last week’s heavy demand for neutral to bearish defensive options strategies.
Bitcoin has only an 18% probability of reaching $80,000 on June 26
Bitcoins’ short-term prospects are not inspiring traders, as the June 26 expiry date shows.
Deribit June 26 Bitcoin options pricing. Source: Deribit
On Thursday, the $80,000 call option for June traded at 0.0103 BTC which is equivalent to $757. With 28 days left until expiration, implied odds for Bitcoin to trade above that level is 18%. Part of the reason for this pessimism is due to $1.07bn in net withdrawals from US listed spot Bitcoin ETFs during a two-day period.
Related: Bitcoin falls further as BTC miners pivot to AI, pro-crypto legislation stalls
Sequans Communications, a Paris-based semiconductor company, announced Thursday plans to completely overhaul its entire product line. liquidate its Bitcoin holdingsIt has abandoned the previous strategy to accumulate bitcoins. Trump Media and Technology Group, as publically-traded mining firms as well have recently reduced their Bitcoin exposure.
Bears are clearly in the lead heading into this Friday’s expiry, which begins at 8am UTC. Fear and uncertainty persist. market uncertainty should prevailThe odds that the bullish trend will continue in the short-term are significantly reduced.
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Source: cointelegraph.com
