Here’s why $16.5K is critical for November’s $1.14B Bitcoin options expiry

Bitcoin (BTC) confronted a 7.3% drop between Nov. 20-21 because it examined the $15,500 help. Whereas the correction appears small, the motion has triggered $230 million in liquidations in futures contracts. Consequently, bulls utilizing leverage got here out ill-prepared for the $1.14 billion month-to-month choices expiry on Nov. 25.

Bitcoin traders’ sentiment worsened after Genesis Buying and selling, which is a part of the Digital Foreign money Group (DCG) conglomerate, halted payouts at its crypto lending arm on Nov. 16. Extra importantly, DCG owns the fund administration firm Grayscale, which is answerable for the most important institutional Bitcoin funding automobile, the Grayscale Bitcoin Belief (GBTC).

Moreover, Bitcoin miner Core Scientific has warned of “substantial doubt” about its continued operations over the following 12 months given its monetary uncertainty. In its quarterly report filed with the US Securities and Trade Fee (SEC) on Nov. 22, the agency reported a internet lack of $434.8 million inthe third quarter of 2022.

In the meantime, New York Legal professional Normal Letitia James addressed a letter to the members of U.S. Congress on Nov. 22 recommending barring the acquisition of cryptocurrencies utilizing funds in IRAs and outlined contribution plans akin to 401(okay) and 457 plans.

Regardless of bulls’ finest efforts, Bitcoin has not been in a position to publish a day by day shut above $17,000 since Nov. 11. This motion explains why the $1.14 billion Bitcoin month-to-month choices expiry on Nov. 25 may gain advantage bears regardless of the 6% rally from the $15,500 backside.

Most bullish bets are above $18,000

Bitcoin’s steep 27.4% correction after failing to interrupt the $21,500 resistance on Nov. 5 shocked bulls as a result of solely 17% of the decision (purchase) choices for the month-to-month expiry have been positioned under $18,000. Thus, bears are higher positioned although they positioned fewer bets.

A broader view utilizing the 1.14 call-to-put ratio exhibits extra bullish bets as a result of the decision (purchase) open curiosity stands at $610 million towards the $530 million put (promote) choices. Nonetheless, as Bitcoin is down 20% in November, most bullish bets will probably grow to be nugatory.

As an illustration, if Bitcoin’s value stays under $17,000 at 8:00 am UTC on Nov. 25, solely $53 million price of those name (purchase) choices will probably be out there. This distinction occurs as a result of there is no such thing as a use in the best to purchase Bitcoin above $17,000 if it trades under that stage on expiry.

Bears may safe a $245 million revenue

Beneath are the 4 almost definitely situations based mostly on the present value motion. The variety of choices contracts out there on Nov. 25 for name (bull) and put (bear) devices varies, relying on the expiry value. The imbalance favoring either side constitutes the theoretical revenue:

• Between $15,000 and $16,000: 200 calls vs. 16,000 places. The web end result favors bears by $245 million.
• Between $16,000 and $17,000: 3,200 calls vs. 11,900 places. The web end result favors bears by $145 million.
• Between $17,000 and $18,000: 5,600 calls vs. 8,800 places. Bears stay in management, profiting $55 million.
• Between $18,000 and $18,500: 9,100 calls vs. 6,500 places. The web end result favors bulls by $50 million.

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This crude estimate considers the decision choices utilized in bullish bets and the put choices completely in neutral-to-bearish trades. Even so, this oversimplification disregards extra complicated funding methods.

Bitcoin bulls must push the worth above $18,000 on Nov. 25 to flip the tables and keep away from a possible $245 million loss. Nonetheless, Bitcoin bulls just lately had $230 million price of liquidated leveraged lengthy futures positions, so they’re much less inclined to push the worth increased within the quick time period. With that mentioned, essentially the most possible state of affairs for Nov. 15 is the $15,000-to-$17,000 vary offering a good win for bears.

The views, ideas and opinions expressed listed below are the authors’ alone and don’t essentially mirror or signify the views and opinions of Cointelegraph.