Everyone is talking about a Bitcoin price (BTC) six-digit, now that digital assets have broken their multi-month downtrend and confirmed that an uptrend is at play.
If Bitcoin were to enter a parabolic move towards $110,000, it would finally match PlanB’s Stock-to-Flow model prediction. According to the analyst, the scarcity and appreciation of gold and other precious metals, the Elon Musk energy “FUD (abbreviation for fear, uncertainty and doubt) and China’s mining crackdown” are some of the factors responsible for the last five months 50% or more inaccuracy in the model.
The bulls’ hopes hang mainly on a exchange traded fund (ETF) which is being approved by the US Securities and Exchange Commission. Currently, there are several requests for review pending between October 18th and November 1st, but the regulator can postpone its final decision.
The $830 million options expiration on Oct. 15 was largely impacted by the 20% price hike that started on Oct. 4, which likely eliminated 92% of put options.
The result of China’s mining crackdown was a major event that may have fueled investor sentiment, and surveys show that the US accounts for 35.4% of Bitcoin’s hash rate.
Furthermore, as reported by the Cointelegraph, the US states of Texas and Ohio are also expected to host large-scale Bitcoin mining centers, which will effectively further increase the US share of the cryptocurrency market.
The expiration on October 8 was profitable for the bulls.
After last week’s estimated net profit of $370 million from the expiration of BTC options, bulls had more firepower, and that’s evident in Friday’s $820 million maturity. This advantage explains why open call (call) options are 43% larger than bearish-neutral puts.
As the data above shows, the bears placed $335 million in bets for the Friday expiration, but it looks like they were taken by surprise, as 92% of the puts (sell) are likely to become useless.
In other words, if Bitcoin stays above $56,000 on October 15th, only $36 million in bearer-neutral puts will be activated by the Friday expiration at 8:00 UTC.
Bulls have a reason to push the BTC price above $58,000
Below are the four most likely scenarios for the October 15th expiration. The imbalance that favors either side represents theoretical profit. In other words, depending on the expiration price, the number of buy (buy) and sell (sell) contracts that become assets varies:
Between $52,000 and $54,000: 3,140 calls against 2,110 put options. The net result is US$ 55 million in favor of purchase instruments (bull).
Between $54,000 and $56,000: 3,700 calls against 1,240 put options. The net result is $130 million in favor of the purchase instruments (bull).
Between US$56,000 and US$58,000: 4,850 calls against 680 put options. The net result is US$ 235 million favoring purchase instruments (bull).
Above US$58,000: 6,230 call options against 190 put options. The net result is complete dominance, with the bulls earning $350 million.
This rough estimate assumes call options being used exclusively on high bets and put options on neutral trades for lows. However, investors may have used a more complex strategy that typically involves different expiration dates.
Bears need a 7% price correction to reduce their losses
In all scenarios, bulls have absolute control of this Friday’s expiration, and there are a handful of reasons why they should keep the price above $56,000. Bears, on the other hand, need a 7% negative move below $54,000 to avoid a loss of $235 million or more.
However, traders should consider that during bull runs, the amount of effort a seller needs to push the price is immense and often ineffective. Analyzes point to a considerable advantage of call options, fueling even more bullish bets next week.
The views and opinions expressed here are solely from the author and do not necessarily reflect Cointelegraph’s views. Every investment and trading move involves risk. You must conduct your own research when making a decision.
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