1.9 billion USD-denominated BTC options will expire on February 24, and the bulls have benefited despite the Federal Reserve’s intention to cool the US economy.
Bitcoins
BTC
fall
$24,905
16% price increase from February 13th. until February 16 there is almost no hope for the monthly option expiring below $21,500. A current rally makes bearish bets unlikely to pay off, especially when the stock expires on February 24. However, the bulls are not expected to there was a positive rejection of the $25,200 price on February 21, which reduced their chances of securing $480 million. USD profit from the expiration of this month’s BTC option.
A major concern for Bitcoin investors is tighter monetary policy as the US Federal Reserve raises interest rates and shrinks its $8 trillion balance sheet. February 22 minutes from the last meeting of the Federal Reserve Bank showed that the members agreed to the final increase of 25 points and that the Fed is ready to increase the price as long as deemed necessary.
St. Louis Federal Reserve Bank President James Bullard on CNBC February 22. said that increasing inflation will give them more room to control inflation. Bullard says:
“Be smart now, let’s control inflation in 2023.”
If true, higher interest rates would be bad for related assets, including Bitcoin, as it increases the income from fixed income.
Even if the news is still bad, the bulls can still earn up to $480 million. USD at the expiration of Friday’s monthly options. However, the bears can still improve their position by pushing the price of BTC below $23,000.
Bears don’t expect $22,000 in bitcoin
Open interest on February 24 1.91 billion for the month option expires. USD, but the actual price will be lower because the expected price will be less than USD 23,000. However, these traders were surprised as Bitcoin rose 13.5% between February 15 and February 16.
A call-to-offer ratio of 1.55 indicates $1.16 billion. USD open interest and 750 mln. USD put (place) choose the odds. If on February 24 8 hours UTC Bitcoin price will be close to $24,000, only 125 million will be available for purchase. USD value of these call (put) options. This difference is due to the fact that the right to sell Bitcoin at $22,000 or $23,000 is ineffective if BTC is trading above this level at expiration.
Bulls plan $23,000 to get $155 million in revenue
Below are the four best scenarios based on current prices. On February 17, the number of contracts available on the call (bull) and put (bear) instruments varies depending on the expiration price. Any uncertainty in the agreement of all parties leads to the following theoretical results:
At $22,500 to $23,000: 12,500 calls and 10,700 puts. The profit is 40 million.
At $23,000 to $24,000: 16,200 calls and 7,600 puts. The profit is 200 million.
From $24,000 to $24,500: 21,100 calls and 5,200 puts. The Bulls extended their lead to 385 million.
At $24,500 to $25,000: 23,200 calls and 3,600 puts. Bulls won 480 million.
This raw estimate takes into account call options used for large bets and offers options only in medium and low markets. However, this oversimplification ignores many investment strategies.
For example, a trader can sell a call option, getting a profit for Bitcoin above a certain price, but unfortunately there is no easy way to measure the accuracy.
Related: US lawmakers introduce a bill to limit the Fed’s power over the dollar
Fed policy tightening is the best shot
Bitcoin bulls should push the price above $24,500 on February 24 to secure a potential $480 million. USD profit. On the other hand, the best-case scenario for bears needs a 3.5% price drop to $23,000 to cut their losses.
Given the negative impact from the Fed’s desire to weaken the economy and financial restrictions, the bears have a good opportunity to improve their position on February 24. Solved with 40 million leaving millions of dollars lost due to expiration of monthly BTC options.
