Bitcoin bears attempt to pin BTC price under $23K ahead of this month’s options expiry

Mar 11, 2023 | wjb news

Between Feb. 13 and 16, the price of Bitcoin rose 16%, largely dispelling the expectation of bears that the option would expire at less than $21500 a month. As a conclusion of a sudden pullback, such bearish bets are unlikely to yield gains, especially since the expiration date is Feb. 24. However, the bulls did not expect to reject the tough price of $25200 on Feb. 21, reducing their chances of making a profit of $480 million after the recent bitcoin options expire.

With the Federal Reserve (Federal Reserve) raising interest rates and shrinking its $8 trillion balance sheet, Bitcoin investors' key concern is stricter fiscal policy. On February 22nd, the 22min of the most recent meeting of the Federal Open Market Committee (Federal Open Market Committee) showed that members agreed on the latest 25% increase in interest rates, and that the Fed wanted to raise rates again if necessary.

Brad, chief executive of the St. Louis Fed, told CNBC representatives on February 22nd that more aggressive rate hikes would give them a better chance to fight inflation. Brad said:

"now let's take action to get inflation under control by 2023."

If confirmed, the rise in interest rates will undoubtedly be negative for risky assets, including bitcoin, because it brings more operational capacity to fixed-income investments.

Even if the information flow is still negative, ShuangTou can still make a profit of $480 million from Friday when the monthly summary option expires. However, bears can still lower the price of BTC to $23000 to significantly improve his situation.

People who are bearish on Bitcoin do not think that Bitcoin will have 22000 dollars.

The unforced closing benefit for the monthly summary option that expires on Feb. 24 is $1.91 billion, but the figure will actually be low because the expected price of the bears will be less than $23000. Even so, Bitcoin rose 13.5% between February 15 and February 16, which surprised the trader.

The bearish ratio of 1.55 reflects the imbalance between $1.16 billion bullish (buy) unforced unliquidated interest and $750 million put (sell) option. If the price of bitcoin stays around $24000 at 8: 00 a. M. UTC on Feb. 24, only $125 million of these put (sell) options will be available. The reason for this difference is that if bitcoin is higher than this level after maturity, there is no point in the right to sell bitcoin for $22000 or $23000.

Double target of $23000 to ensure a profit of $155 million

The following are the four most likely scenarios based on current market prices. Depending on the expiration price, the total number of options contracts suitable for bullish (bullish) and bearish (bearish) instruments varies on February 17th. The instability that benefits each other forms the profit of this theory:

  • $22500 to $23000:12500 put options versus 10700 put options. The final results show that the bullish (bullish) tool has increased by $40 million.
  • Between $23000 and $24000:16200 put options versus 7600 put options. In the end, the bullish (bullish) tool increased by $200 million.
  • $24000 to $24500:21100 put options versus 5200 put options. The double head expands the advantage to $385 million.
  • $24500 to $25000:23200 put options versus 3600 put options. Shuangtou dominates with a profit of $480 million.

This may roughly take into account the call options commonly used in call bets and the put options commonly used only in neutral to put trades. Even so, this overly simplistic approach ignores more complex investment advice.

For example, traders can sell call options and efficiently get bitcoin open in the opposite direction, which is higher than the special price, but unfortunately, there is no easiest way to make this effect possible.

Fed meeting to tighten current policy depends on the choice of bears.

Bitcoin bulls will have to push up the price to around 24500 yuan on Feb. 24 to guarantee a hidden profit of $480 million. On the other hand, in good times, short sellers must sell for 3.5% under $23000 to minimize damage.

Taking into account the negative work pressure of the Fed meeting to weaken the economy and fight inflation, bears are likely to adjust their situation and end the damage at $40 million on February 24th. The move may not be successful, but it is the only way for bears to address the multimillion-dollar losses caused by the expiration of BTC's monthly summary options.

In terms of the broader time frame, investors still feel that the Fed meeting will eventually reverse its current fiscal policy in the second half of 2023-possibly taking advantage of sustainability before the bitcoin commodity incentive was halved in April 2024.