Over the past 24 hours, Bitcoin (BTC) is down 10% today to test the $ 30,000 support. The drop came during what traders called the “main” support just two days before the end of this month’s futures and options contracts.
Although there are only two days left before the standard expiration of the $ 4 billion options, both the bullish and bearish sides have traded roughly today.
Unlike futures contracts, options are split into two parts. Call (Buy) options allow the buyer to buy BTC at a fixed price on the expiration date. On the other hand, the seller of the instrument will be required to sell BTC. Generally, they are used in either neutral arbitrage transactions or bullish strategies.
Usually put (put) options are used as a hedge to protect against negative price fluctuations.
To understand how these competing forces are balanced, the call and sales volumes must be compared for each expiration price. Options markets are all-or-nothing, which means that they have value or lose value if you trade above the callback price, or vice versa for sellers.
Volume in the past 24 hours favored more bullish calls by 51%. However, this number is skewed due to bullish strikes of $ 37,000 and above. With less than 36 hours remaining until the expiration date, these contracts are trading for less than $ 50 each.
Barring these overly optimistic blows, current trading has added another $ 95 million in open interest rates on calls below $ 35,000. On the other hand, more bear bets of $ 27,000 or more are $ 90 million in open interest.
The result of today’s activity was neutral due to the expiry of Friday’s options. However, the general imbalance of the open interest has to be controlled separately from the current movement.
By excluding groups under $ 27,000 and calls over $ 35,000, it’s easier to assess the potential impact of Friday’s expiration. The likelihood of incentives to raise or lower prices is more than 16% because the potential gains rarely exceed the costs.
This data leaves $ 582 million to $ 35,000 in call options with a cumulative expiration date of January 29. Meanwhile, more bear sell options total $ 27,000 to $ 422 million. Hence, there is a $ 160 million defect in favor of more upstream calls.
Given the trading volumes over the past 24 hours and the open interest in call options, bears won’t benefit much from squeezing BTC under $ 29,000, at least from an options market perspective.