Bitcoin under $60K

When Bitcoin was above 68,000 last week, bulls had a 715 million advantage, but the current downturn gives bears a chance to turn the tables. Bitcoin bulls rejoiced when the price of bitcoin reached 69,000 on November 10 because the 14.5 percent gain in five days meant they were on track for a 715 million profit when options expired in November.

Most call options for November 19 were at $66,000 or higher. Hence, the 9% drop in price on November 16 caught bulls off guard. Surprisingly, that price level has been an outlier rather than the norm.

The SEC expressed their concerns about Tether’s (USDT) stablecoin and its inability to deter fraud and market manipulation in Bitcoin trading. Bloomberg senior ETF analyst and cryptocurrency expert Eric Balchunas had already predicted a 1% chance of approval. Hence, the rejection came as no surprise. Furthermore, on November 15, U.S. President Joe Biden signed the infrastructure bill. It requires reporting of digital asset transactions worth more than $10,000 to the Internal Revenue Service beginning in 2024.

Given the above scenario, bulls are likely to be disappointed by their lack of more conservative bets on the $1.1 billion weekly options expiry on November 19. At first glance, the $630 million call (buy) options appear to have a 35% advantage over the $470 million puts (sell) instruments in the weekly expiry. Nonetheless, the 1.35 call-to-put ratio is deceptive because the recent price decline will almost certainly wipe out the most bullish bets.

Bears eyes set on prices below $60,000

The four most likely scenarios for the $1.1 billion expiries on November 19 are listed below. This rough estimate considers only call options used in bullish bets and put options used in neutral-to-bearish trades. This oversimplification, however, ignores more complex investment strategies.

A trader could have sold a put option to gain positive exposure to Bitcoin above a specific price. Regrettably, there is no easy way to estimate this effect.

Bulls require a 6% price increase

Bulls can only profit significantly from the November 19 expiry if Bitcoin’s price rises above $64,000. This is 6% higher than the current price of $60,400. If the current short-term negative sentiment continues, bears may exert some pressure and try to profit up to 220 million if Bitcoin remains near 58,000.