Here’s why Bitcoin price could tap $21K before Friday’s $510M BTC options expiry

Bitcoin (BTC) has been making an attempt to interrupt above the $20,500 resistance for the previous 35 days, with the most recent failed try on Oct. 6. In the meantime, bears have displayed energy on 4 totally different events after BTC examined ranges beneath $18,500 throughout that interval.

Bitcoin/USD worth index, 12-hour chart. Supply: TradingView

Traders are nonetheless uncertain whether or not $18,200 was actually the underside as a result of the assist stage weakens every time it’s examined. That’s the reason it’s vital for bulls to maintain the momentum throughout this week’s $510 million choices expiry.

The Oct. 21 choices expiry is very related as a result of Bitcoin bears can revenue $80 million by suppressing BTC beneath $19,000.

Bears positioned their bets at $19,000 and decrease

The open curiosity for the Oct. 21 choices expiry is $510 million, however the precise determine will likely be decrease since bears had been overly-optimistic. These merchants fully missed the mark inserting bearish bets at $17,500 and decrease after BTC dumped beneath $19,000 on Oct. 13.

Bitcoin choices combination open curiosity for Oct. 21. Supply: CoinGlass

The 0.77 call-to-put ratio exhibits the dominance of the $290 million put (promote) open curiosity towards the $220 million name (purchase) choices. However, as Bitcoin stands close to $19,000, most bearish bets will doubtless grow to be nugatory.

If Bitcoin’s worth stays above $19,000 at 8:00 am UTC on Oct. 21, solely 4% of those put (promote) choices will likely be obtainable. This distinction occurs as a result of a proper to promote Bitcoin at $18,000 or $19,000 is nugatory if BTC trades above that stage on expiry.

Bulls can nonetheless flip the desk and safe a $150 million revenue

Under are the 4 probably eventualities based mostly on the present worth motion. The variety of Bitcoin choices contracts obtainable on Oct. 21 for name (bull) and put (bear) devices varies, relying on the expiry worth. The imbalance favoring either side constitutes the theoretical revenue:

  • Between $18,000 and $19,000: 0 calls vs. 4,300 places. The web outcome favors the put (bear) devices by $80 million.
  • Between $19,000 and $20,000: 1,500 calls vs. 1,100 places. The web result’s balanced between calls and places.
  • Between $20,000 and $21,000: 4,300 calls vs. 100 places. The web outcome favors the decision (bull) devices by $85 million.
  • Between $21,000 and $22,000: 7,200 calls vs. 0 places. The web outcome favors the decision (bull) devices by $150 million.

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

For instance, a dealer might have bought a put possibility, successfully gaining constructive publicity to Bitcoin above a particular worth, however sadly, there isn’t any simple approach to estimate this impact.

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A couple of extra dips beneath $19,000 wouldn’t be stunning

Bitcoin bears have to push the value beneath $19,000 to safe an $80 million revenue. Alternatively, the bulls’ best-case situation requires a pump above $21,000 to flip the tables and rating a $150 million acquire.

Bitcoin bulls had $80 million in leveraged lengthy positions liquidated on Oct. 12 and Oct. 13, so they need to have much less margin than is required to drive the value greater. Consequently, bears have greater odds of pinning BTC beneath $19,000 forward of the Oct. 21 weekly choices expiry.