Crypto analyst Marcel Pechman points to the possibility of the $2.2 billion option expiration in September. Therefore, he sees it as possible for Bitcoin (BTC) price to put pressure near a critical support level. That’s why he notes that traders expect an increase in volatility. We have prepared Marcel Pechman’s Bitcoin analysis for our readers.
“Macroeconomic events are likely to trigger an early rally”
cryptocoin.comThis week, the $20,000 resistance proved to be stronger than expected. The leading crypto rejected this level on September 27. However, BTC bulls still have reasons not to give up. According to the four-month descending triangle, support at $18,500 stands. As long as this continues, Bitcoin has until the end of October to determine if the bear trend will continue.
BTC has failed to break above $20,000 many times. So it’s possible that the bulls were disappointed by the lackluster price performance. However, it is possible that macroeconomic events will trigger an earlier rally than expected. Some analysts see the UK’s unexpected intervention in the bond market as a breaking point in the government’s debt credibility. On September 28, the Bank of England raised interest rates sharply, the highest since 1957. After that, it announced that it will start temporary buying of long-term bonds to calm investors.
Meanwhile, the impact of the government’s efforts to reduce inflation is starting to erode corporate revenues. Apple recently abandoned its plans to increase production on September 27, according to Bloomberg. In addition, Amazon, the world’s largest retailer, has also abandoned its plan to open 42 facilities, according to MWPVL International Inc.
Therefore, the $2.2 billion Bitcoin monthly options expiring on September 30 are significant. The bears seem a little better positioned as Bitcoin struggles to hold onto $19,000. However, these options will put a lot of price pressure on the bulls.
Most Bitcoin bull bets are over $21,000
Bitcoin made a rally towards the $22,500 resistance on Sept. 12. This gave the bulls a signal to wait for the uptrend to continue. This is due to the fact that only 15% of call (buy) options for September 30 are placed at $21,000 or less. This means that Bitcoin bears are better positioned for the $2.2 billion expiry in their monthly options.
A broader view using the 1.49 call-put ratio shows a skewed situation where the bulls call open interest against $850 million put options is $1.26 billion. However, Bitcoin is currently close to $19,000 and the bears are in a dominant position.
If BTC stays below $20,000 by 8:00 AM UTC September 30, it will only be worth $37 million in call (buy) options. This difference is due to the lack of right to buy at $20,000 or $21,000 if Bitcoin trades below this level at maturity.
Bitcoin bears are likely to make $350 million in profits
Below are the four most likely scenarios based on the current price action. The number of options contracts available as of September 30 for call (bull) and put (bear) instruments varies depending on the expiration price. The imbalance in favor of both parties constitutes the theoretical profit:
- Between $18,000 and $19,000: 500 calls vs. 19,800 puts. The net result is that the bears make $350 million in profit.
- Between $19,000 and $20,000: 2,000 calls and 16,000 puts. The net result is that the bears make $270 million in profit.
- Between $20,000 and $21,000: 5,900 calls vs. 12,700 idols. The net result is that the bears make a profit of $135 million.
- Between $21,000 and $22,000: 10,100 calls and 11,300 puts. The net result is balanced between bulls and bears.
This rough estimate takes into account call options used in bull bets and put options only on neutral to bearish trades. Even so, this oversimplification ignores more complex investment strategies.
Regulatory pressure is likely to complicate matters for BTC bulls
Bitcoin bulls have a shot at balancing the scales and avoiding the potential $350 million loss. For that, they need to push the price above $21,000 on September 30. However, the Fed chief warned on September 27 of ‘very important structural problems around the lack of transparency’. Accordingly, he called for the regulation of ‘crypto activities’. That’s why Bitcoin bulls seem unlucky.
If the bears dominate the September options expiration, this will likely add firepower for more downside bets for Bitcoin. At the moment, however, there are no signs that the bulls can change the charts and escape the pressure of the four-month descending triangle.
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