- It can be said that the expiration of the $4.7 billion Bitcoin options on June 30th could play a decisive role.
- Bitcoin bears will try to take advantage of macroeconomic and regulatory headwinds, including exchanges implementing mandatory Know Your Customer (KYC) procedures.
- Bitcoin’s price recently touched the $31,000 level on June 27th, but encountered stronger resistance than expected.
Over $4.7 billion worth of Bitcoin options will expire on Friday: How will this event affect the Bitcoin price? Possible scenarios!
Bitcoin Options Expiry Tomorrow
It can be said that the expiration of the $4.7 billion Bitcoin options on June 30th could play a decisive role in determining whether the $30,000 level consolidates as long-term support and creates open space for the continuation of the bull trend.
Many analysts consider Bitcoin’s recent breakout above $27,000 as a move related to numerous spot Bitcoin exchange-traded fund (ETF) applications, such as BlackRock and ARK Invest. This news has also increased expectations for Grayscale to convert its Grayscale Bitcoin Trust (GBTC) fund into a Bitcoin ETF.
Furthermore, Bitcoin bears will try to take advantage of macroeconomic and regulatory headwinds, including exchanges implementing mandatory Know Your Customer (KYC) procedures.
In addition, there are increasing concerns about selling pressure from miners due to the network hash rate reaching 400 exahashes per second. Glassnode analytics firm noted that miners sent a record-high BTC income ratio of $128 million to exchanges last week. Interestingly, this move mimics the increases seen in miners’ profits during the 2021 bull run.
Additionally, at the European Central Bank forum in Portugal, Federal Reserve (Fed) Chairman Jerome Powell announced that most policymakers expect two interest rate hikes for the remainder of this year. According to CME FedWatch, investors are pricing in an 89% probability of a 25 basis point interest rate hike on July 26th.
Bitcoin’s price recently touched the $31,000 level on June 27th, but encountered stronger resistance than expected. It then dropped to the $30,000 level, supporting the short-term sideways price movement theory as investors evaluate the effects of additional Fed interest rate hikes.
The Real Figure Will Be Lower Due to Bulls Being Overly Optimistic
Although there is $4.7 billion in open positions for the expiration of options on June 30th, the actual figure will be lower because bulls were expecting a price level of $32,000 or higher. These traders became extremely optimistic when Bitcoin’s price tested the $31,000 resistance, showing a 25.5% increase between June 15th and June 23rd.
The 0.56 put-call ratio reflects the imbalance between $3.1 million worth of call open positions and $1.7 million worth of put options.
However, if Bitcoin’s price remains around $30,500 at 08:00 UTC on June 30th (11:00 Turkey time), only $630 million worth of call options will be exercisable. This difference arises from the fact that the right to buy Bitcoin at $31,000 or $32,000 levels would become worthless if BTC trades below that level at expiration.
Bitcoin Bears Target Below $30,000 to Balance the Scales
Based on the current price movement, four possible scenarios are presented below. The number of options contracts available on June 30th for both call and put instruments varies depending on the price at expiration. The imbalance favoring both sides creates theoretical profits.
- Between $28,000 and $29,000: 7,200 call vs. 16,200 put. Bears take control and earn $250 million.
- Between $29,000 and $30,000: 13,000 call vs. 12,600 put. The result balances between put and call options.
- Between $30,000 and $31,000: 1,500 call vs. 2,100 put. The result is supported by call instruments worth $440 million.
- Between $31,000 and $32,000: 3,300 call vs. 800 put. The result is supported by call instruments worth $670 million.
This simple estimation considers the call options used in bullish trades and the put options made from neutral to bearish. However, this simplification overlooks more complex investment strategies.
For example, a trader can sell a put option to gain positive exposure to Bitcoin above a certain price. Unfortunately, predicting this effect is not easy.
As a result, the BTC price will depend on whether bears are willing to take risks, as we are in a period where the potential entry or timing of a spot Bitcoin ETF is being analyzed by the SEC.
