Key Takeaways:
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Friday's $14 billion BTC options expiry favors neutral to bearish bets as most call (buy) strikes are above $91,000, adding pressure to bulls.
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Bitcoin traders have added year-end buy options near $100,000 despite recent losses, showing that bullish expectations remain.
Bitcoin (BTC) price fell on Tuesday after failing to take care of the $89,200 level reached yesterday. Traders are increasingly concerned that Friday's $14 billion BTC options expiry could add to bearish sentiment following weaker private employment data and a decline in U.S. consumer confidence.
November 28, aggregated open BTC call (buy) options, BTC. Source: laevitas.ch
The total open interest in BTC call (buy) options is 104,300 BTC, which is value $9.12 billion at current prices. But Bitcoin's recent 23% drop in 30 days surprised bulls, as 84% of those positions were placed above $91,000. These contracts are expected to run out worthless if the spot price stays near current levels.
Open interest in put (sell) options totals 67,877 BTC or $5.92 billion. Although put positions are 35% smaller than open call positions, they seem like more aligned with prevailing market conditions, with 31% pegged at $84,500 or less. Even if Bitcoin recovers a few of its recent losses by November twenty eighth, the probability of a neutral to bearish consequence is favorable.
Risk sentiment further deteriorated after payroll processor ADP reported on Tuesday that U.S. private corporations cut a median of 13,500 jobs per week over the past 4 weeks. The weakness of the labor market represents an extra challenge for a consumer-oriented economy.
Investor sentiment weakened further after the US Conference Board reported that consumer confidence fell to 88.7 in November from 95.5 the previous month. Income and business expectations also fell, remaining well below the neutral threshold of 80% for the tenth straight month, in response to Yahoo Finance.
Weak economic data raises hopes that the Fed will intervene
Although deteriorating economic indicators weigh on investor expectations, in addition they increase the likelihood that the Federal Reserve will adopt a less restrictive monetary policy stance. Gold rose 1.2% and the Russell 2000 small-cap index rose 1.9%, as traders expected additional liquidity measures from the U.S. Treasury to assist stabilize the economy.
On Monday, US President Donald Trump signed the “Genesis Mission” executive order aimed toward accelerating the event of artificial intelligence and reducing perceived risks related to energy shortages and long-term financing needs as large high-performance computing facilities could strain credit markets.
Bitcoin traders responded by increasing their year-end call option positions within the $100,000 to $112,000 range over the past 48 hours, signaling that medium-term optimism continues despite recent price weakness.
89,000 US dollars is the crucial value that decides the dynamics of Bitcoin
Below are five likely BTC options expiry scenarios in November based on current price trends:
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Between $85,000 and $87,000: The net result favors put (sell) instruments by $1.9 billion.
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Between $87,001 and $88,000: The net result favors the put (sell) instruments by $800 million.
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Between $88,001 and $89,000: Balanced result between call and put options.
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Between $89,001 and $90,000: The net result favors the decision (buy) instruments by $600 million.
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Between $90,001 and $92,000: The net result favors call (buy) instruments by $3.8 billion.
It is likely to be premature to completely reject bullish BTC options strategies. Investor sentiment continues to depend closely on macroeconomic conditions and expectations of possible stimulus measures from central banks world wide.
This article is for general information purposes and will not be intended to constitute, and shouldn’t be construed as, legal or investment advice. The views, thoughts and opinions expressed herein are those of the creator alone and don’t necessarily reflect the views and opinions of Cointelegraph.
