The bears are currently better positioned to beat this week’s $510M BTC options, but their overconfidence could give the bulls a chance to tip the table.
Bitcoin
BTC
dial down
$19,772
it has been trying to break above the $20,500 resistance for the past 35 days, with the last attempt failing on Oct 6. Meanwhile, the bears have shown strength on four different occasions after BTC tested levels below $18,500 during that period.
Bitcoin/USD price index, 12-hour chart. Source: TradingView
Investors are still unsure if $18,200 was really the bottom as the support level weakens every time it is tested. That’s why it’s important for the Bulls to maintain momentum during this week’s $510 million options expiration.
The October 21 options expiry is particularly relevant, as Bitcoin bears could make $80 million in profits by suppressing BTC below $19,000.
The bears placed their bets at $19,000 and under
The open interest for the October 21 option expiration is $510 million, but the actual figure will be lower because the bears were too bullish. These traders missed the mark entirely, placing bearish bets at $17,500 or less after BTC dipped below $19,000 on Oct. 13.
Aggregate Bitcoin Options Open Interest for Oct 21 Source: CoinGlass
The call-to-put ratio of 0.77 shows the dominance of $290 million put open interest over $220 million call options. Still, with Bitcoin hovering near $19,000, most bearish bets will likely lose their value.
If the price of Bitcoin stays above $19,000 at 8:00 a.m. m. UTC on October 21, only 4% of these put options will be available. This difference occurs because the right to sell Bitcoin at $18,000 or $19,000 is worthless if BTC trades above that level at expiration.
The bulls can still turn the tables and secure a $150 million profit
Below are the four most likely scenarios based on the current price action. The number of Bitcoin options contracts available on October 21 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:
Between $18,000 and $19,000: 0 calls vs. 4,300 puts. The net result favors put (bear) instruments by $80 million.
Between $19,000 and $20,000: 1,500 calls vs. 1,100 puts. The net result is balanced between calls and puts.
Between $20,000 and $21,000: 4,300 calls vs. 100 puts. The net result favors call instruments (bull) with $85 million.
Between $21,000 and $22,000: 7,200 calls vs. The net result favors call instruments (bull) with $150 million.
This rough estimate takes into account put options used on bearish bets and call options used exclusively on neutral-to-bullish trades. However, this simplification ignores more complex investment strategies.
For example, a trader could have sold a put option, effectively gaining positive exposure to Bitcoin above a specific price, but unfortunately there is no easy way to estimate this effect.
Related: Strong Bitcoin Price Move Expected as Volatility Remains at Record Levels and Sellers “Exhausted”
A few more dips below $19,000 wouldn’t be surprising
Bitcoin bears need to push the price below $19,000 to secure an $80 million gain. On the other hand, the bulls’ best-case scenario requires a pump above $21,000 to turn the tables for a $150 million profit.
Bitcoin bulls had $80 million in leveraged long positions that were liquidated on Oct. 12 and 13, leaving them with less room than needed to push the price higher. Therefore, the bears have a higher chance of BTC reaching below $19,000 before the weekly options expiry on Oct 21.
