With Bitcoin heading towards the strongest monthly close since March, $250 million in options contracts are about to expire today. What is expected? At what level of sell orders are concentrated? Let’s answer…
Bears go into defensive mode as bitcoin options expire
The BTC price saw a serious drop after the Coinbase and Binance lawsuits. Meanwhile, it also triggered a downward trend in the options market. According to data from Deribit, the buy rate of 0.82 compares the open position of $415 million call options to $300 million put options.
Options contracts are financial instruments that give the right to buy or sell at a certain price on or until a certain date. The bears are currently on the defensive as Bitcoin is up 10% in just two days…
For example, if the price of Bitcoin stays around $29,800 at 11:00 am on June 23, there will only be $5 million worth of put options. This difference is due to the fact that the right to sell Bitcoin at $28,000 or $29,000 is void if BTC trades above that price at maturity.
What is expected?
On the other hand, bulls are likely to make a profit of $250 million at maturity today. Here are the most likely scenarios based on the BTC price range:
- For the price range of $27,000 to $28,000, there are 3,500 options (calls) compared to 1,200 options (sells). This provides a net advantage of $60 million for purchased instruments.
- Between $28,000 and $29,000, there are 7,300 calls and 500 puts. The net advantage for buying instruments comes to $195 million.
- Between $29,000-30,000, there are 8,600 buy options (calls) and only 100 sell options (puts). For buyers (bulls), the advantage goes up to $250 million.
- Finally, there are 10,400 call options and put options for the $30,000 to $31,000 range. Bulls have complete control. This results in a profit of $310 million.
Bitcoin’s 30-day price range heralded the rally
Bitcoin registered a sharp rally above $30,000 before the weekend. Tight price ranges have historically preceded big moves, according to data from Glassnode. This range is simply a measure of the percentage difference between last month’s highest price and lowest price.
When this metric is high, BTC has fluctuated significantly between the high-low set over the past 30 days. Such a trend indicates that the respective coin has registered high volatility recently. On the other hand, a low value indicates a narrow range movement throughout the month. This kind of trend naturally highlights how stale price action has been lately.
Historically, extremely tight trading ranges have preceded large, volatile moves in either direction.
Thus the 30-day #Bitcoin High and Low price range can be utilized as a prescient indicator for detecting incoming volatility, with the most recent rally being no exception. pic.twitter.com/CM3YBTNHdy
— glassnode (@glassnode) June 22, 2023
Now, a chart showing the 30-day price range over Bitcoin’s history looks like this:
Glassnode also marked historical instances where Bitcoin has moved within 30-day price ranges. After such periods of tight price consolidation, BTC has generally recorded a burst of volatility. For the next price movements, you can take a look at the current technical analysis that we have transferred as Kriptokoin.com.
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