On June 4, 15,530 Bitcoin (BTC) options will expire, equivalent to $575 million in open interest. At the moment, the bulls are still heavily influenced by the 37% price of BTC in May, which has left most of the acquisitions (buying) under water.
Despite the crash, active Bitcoin supply was at a five-month low as 45% of the coins haven’t moved in the past two years. This indicator shows that investors who bought before the bullish period in 2019, are not ready to sell at current prices.
Miners are also turning sales below $40,000, with production recently hitting a seven-month low compared to the historical average.
Meanwhile, the technical analysts pointed to the 50-week exponential moving average as a strong support level, near $34,000. However, the price chart is forming a side-by-side trading pattern that culminates in a narrowing of the wedge and an implosion known as “pressure,” indicating higher volatility at the end of the week.
The market is now clearly an ambiguous picture, and everyone is interfering with various signals trying to determine the direction of the next trend movement.
Bears can dominate when the markets collapse
While the bears could easily control Friday’s expiration, it appears that they are becoming arrogant, focusing primarily on short (under) options below $32,000.
Open Bitcoin options accruing interest. Source: Bybt
The original picture is favorable because the buy-to-be ratio is 0.84, although this indicator values all options equally. However, the right to buy Bitcoin for $46,000 in less than 42 hours is currently useless, so each call option is trading at less than $20 a piece.
A similar effect is observed with neutral bearish put options at $28,000 and below. Contract holders have no advantage in renewing it in the coming weeks, as these contracts have also become useless. To better assess the position of traders regarding the Friday options expiration, it is necessary to focus on $32,000 to $42,000.
Neutral bullish options up to $42,000 are equivalent to 3,080 bitcoin contracts, which equates to $114 million in open interest. On the other hand, the put options (putting) include up to $32,000 and 4,680 bitcoin contracts totaling $173 million.
As expected, the difference of $60 million in favor of the bears is not enough to cause concern. This situation was caused by very low interest rates that did not pay off, which could lead to the expiration of the first balanced alternative in three weeks.
Market makers tend to the downside
A delta deviation of 25% provides real-time, reliable analysis of ‘fear and greed’. This indicator compares similar calls (buy) and sell (sell) side by side and becomes positive when the premium of neutral bearish prices is higher than calls of similar risk. This situation is usually considered a “fear” scenario, although it often occurs after hard rallies.
On the other hand, a negative bias means a higher cost of protection from growth and indicates an upward trend.
Bitcoin Options for 30 Days 25% Delta Rejection. Source: Laevitas
Since May 17, the index has crossed the “fear” zone several times and reached its peak of 20%, which indicates a lack of interest in offering protection speculators.
There is no doubt that the bulls are afraid, but historically these are the best buying opportunities below.
At least until the option expiration on June 4, bears are no longer dominant. Huobi, OKEx, and Deribit expire on June 4 at 8:00 UTC.