- According to derivative data, if bulls want to earn more, they should push the price above 30,500 on April 14th.
- According to Bitcoin derivative data, if bears want to earn, the price should fall below $29,000.
The BTC price continues to maintain its strength, and derivative data shows that bulls want to push Bitcoin up.
Bitcoin Derivative Data is Positive for BTC Price!
Bitcoin (BTC) price maintained the $30,000 support with the lower-than-expected US Consumer Price Index (CPI) data announced on April 12th. The official inflation rate for March showed a 5% increase year-on-year, which was slightly less than the 5.1% consensus. Although this was the lowest reading since May 2021, it is still significantly higher than the Federal Reserve’s 2% target.
The data shows that inflation is no longer the driving force behind the Bitcoin rally, and investors are turning their focus to potential recession risks after the banking crisis that exposed how fragile the financial system is following the Federal Reserve’s raising of interest rates from 0.10% to 4.85%. Many warning signs of a macroeconomic slowdown have emerged, such as the bankruptcy of Silicon Valley Bank and the acquisition of Credit Suisse by UBS.
The latest ISM Purchasing Managers Index data fell to its lowest level since May 2020, indicating an economic contraction. According to Federal Reserve documents released on April 12th, a “mild recession” is likely to occur later this year after the US banking crisis. Although there is speculation that the Fed will avoid raising interest rates due to the crisis, officials confirmed that more effort is needed to control inflation.
According to a Moody’s Analytics report, commercial real estate prices fell 1.6% in February, the largest decline since the 2008 financial crisis. In addition, the national office vacancy rate reached 16.5%, indicating the severity of the economic challenges businesses are currently facing.
Despite the FUD, including the SEC’s Wells Notice to Coinbase on March 22nd and the CFTC’s lawsuit against Binance and CEO Changpeng Zhao on March 27th, Bitcoin has shown resistance by maintaining the $30,000 support, indicating that positive momentum can continue even if inflation remains above 5%.
Bulls Better Positioned as Weekly BTC Options Expire
Traders who bet on a decline using Bitcoin options, especially, are not happy with the rally. The total open interest for BTC options expiring on April 14th is $950 million, with $490 million in call options and $460 million in put options. Bears were caught unprepared as less than 7% of their bets below $29,000 were realized.
Based on the current price action, four possible scenarios are outlined below. The number of call and put option contracts open on April 14th depends on the strike price. The imbalance in favor of each side creates theoretical profits:
- Between $28,000 and $29,000: 2,600 call options and 1,800 put options. The net result is balanced between call and put options.
- Between $29,000 and $30,000: 6,700 call options and 500 put options. The net result favors call options by $110 million.
- Between $30,000 and $30,500: 8,500 call options and 200 put options. Bulls increase their advantage to $250 million.
- Between $30,500 and $31,500: 11,300 call options and 100 put options. Bulls’ advantage rises to $350 million.
This rough estimate includes call options in bullish bets and put options towards bearish bets. However, this simplification excludes more complex investment strategies. For example, a trader can sell a put option by gaining positive exposure to Bitcoin above a certain price, but this effect is difficult to predict.
Will Bitcoin Bears Suffer Defeat?
Bulls are expected to push Bitcoin above $30,500 on April 14th at 8:00 UTC and earn an extra $100 million. On the other hand, bears need to lower Bitcoin’s price below $29,000 to balance the scales. However, bears have suffered significant losses recently as BTC futures short contracts have been forcibly liquidated, making it difficult for them to reverse their situation.
Since the most likely scenario supports Bitcoin bulls, they will likely use their profits to strengthen the $30,000 support. Bears may consider expecting additional measures from regulators as the macroeconomic scenario is currently positive for scarce assets.
The views, thoughts, and opinions expressed here are the sole views of the author and do not necessarily reflect or represent the views and opinions of COINOTAG. This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their research when making a decision.
