Regulatory concerns continue to affect the entire crypto market. There is an expiration of Bitcoin options this week. It will play a decisive role in pushing the Bitcoin price below $26,000. Let’s look at the details.
Big day for Bitcoin
Bitcoin lost strength after an unsuccessful retest of the $27,400 resistance on June 6. cryptocoin.com He pointed out that investors are less confident after the United States Securities and Exchange Commission’s (SEC) recent regulatory actions against Binance and Coinbase. Both exchanges face lawsuits for multiple crimes, including failing to register as licensed brokers and offering unregistered securities. According to Blockchain Association CEO Kristin Smith, the SEC is trying to circumvent official rulemaking processes. He also tries to deny public participation. Meanwhile, Insider Intelligence crypto analyst Will Paige made a statement. He said the SEC’s goal is to control the space through enforcement in the absence of a regulatory framework. These criticisms explain why investors may be keeping their hopes up at the US Financial Services Committee hearing scheduled for June 13.
The SEC’s oversight has caused ripples on multiple occasions, including in the US legislature. Senator Bill Hagerty, for example, noted that regulators in the SEC “weaponized their role.” He also publicly criticized SEC Chairman Gary Gensler. There is the thesis that the Bitcoin space can function without crypto banks known as centralized exchanges. Another aspect that further supports this thesis is the sudden increase in decentralized finance volumes. The median trading volume on the three largest decentralized exchanges (DEX) rose 444% from June 5 to June 7. DEX volumes are on the rise. On the other hand, there are net outflows on Binance. Accordingly, the difference between the value of assets entering and exiting the stock market reached $778 million.
Bulls are unprepared for negative news flow
The bulls have focused their bets above $27,000. For this reason, let us state that the actual number of open positions will be lower for the 9 June expiry date. These traders were overly optimistic after the Bitcoin price gained 9% between May 25 and May 29 and tested the $28,000 resistance.
The buy/ask ratio of 0.63 reflects the imbalance between the $410 million call open position and the $260 million put option. However, if the price of Bitcoin stays around $26,500 at 8:00 am on June 9, only $38 million worth of these put options will be available. This difference arises because the right to buy Bitcoin at $27,000 or $28,000 does not work if BTC trades below that level at maturity.
Tough week for BTC?
Bitcoin is trying to reclaim the $27,000 support. But on June 9, your $670 million weekly options will expire. Therefore, it may be more difficult than expected.
- Between $25,000 and $26,000: 100 call options versus 5,100 put options. The bears took complete control, making a profit of $125 million.
- Between $26,000 and $27,000: 3,900 put options versus 1,500 call options. The net result is in favor of put (sell) instruments with $65 million.
- Between $27,000 and $28,000: 1,300 put options against 4,200 call options. The net result is in favor of buy (bull) instruments with $80 million.
- Between $28,000 and $29,000: 700 put options versus 8,700 call options. The net result is in favor of buy (bull) instruments with $225 million.
This rough estimate considers put options used in bearish bets and call options used only in neutral-bullish trades. This oversimplification ignores more complex investment strategies. Considering that Bitcoin long positions using futures contracts were liquidated for $100 million on June 5, bulls will need less margin to attempt to push the BTC price above $27,000. As a result, the bears look closer to making a decent profit on Friday’s option expiration.
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