Over the past two weeks, the bitcoin price seems to have lost its momentum, with some analysts suggesting that the bears will have everything under control for the foreseeable future.

An analysis of derivatives market data provides a clearer picture of what is happening on the institutional side and how the actions of major players can affect the spot markets.

After peaking at $ 10.6 billion on January 14, open interest in Bitcoin (BTC) has fallen to $ 8.4 billion. The monthly expiration date of January 29 is still alone at 47% of the available options.

While the expiration date of $ 4 billion may be significant, keep in mind that these options are categorized into buy (bullish neutral) and more bearish options. Also, an option to buy BTC for $ 52,000 on January 29 may make sense two weeks ago, but not now.

As you can see from the data above, Deribit is still the absolute leader with a market share of 83%. To understand how rich this outlet is, however, it is necessary to adjust the data and compare the buying and selling options close to the current BTC level of $ 32,000.

Panic early
Most exchanges offer a monthly expiration date, and some also offer weekly options for short-term contracts. As of December 25, 2020, the longest expiration date for option contracts was recorded at $ 2.4 billion. This figure represents 31% of all open positions and shows how options are usually granted throughout the year.

Data from Bybt.com shows that the expiration calendar on January 29 is 107,000 BTC. This expiration date represents 45% of the total open interest in the options market.

It should be noted that not all options will trade after the expiration, as some of these strikes now appear to be unfounded, especially with less than five days left.

BTC total options start interest rates January 29 Source: bybt.com
When Bitcoin reached a full-time high of $ 42,000, some very bullish call options were sold, but with the price adjustment of BTC, these short-term options became useless.

Currently, no more than 68% of January 29, all options of $ 40,000 or more should count towards settlement. The same can be said about bearish options at $ 25,000 and below. This is 76% of open interest.

This data leaves around $ 745 million in connectivity options less than $ 40,000 with a cumulative expiration on January 29. Meanwhile, several cons are over $ 25,000 $ 300M. Thus, the adjusted open interest rate as of January 29 is $ 1.05 billion with a sales-sales rate of 0.40.

The discrepancy shows that market producers do not want the risk
Open interest rate analysis provides data on trades that have actually taken place, and the divergence indicator tracks options in real time. This number is more relevant as BTC traded for less than $ 23,500 thirty days ago. Therefore, open interest around this level does not indicate bearish trends.

When analyzing alternatives, the delta deviation from 30% to 20% is the most important indicator. This indicator compares buy (buy) and sell (sell) options side by side.

The delta slope of 10% indicates that calls trade at a small premium compared to the more bearish / neutral positions. On the other hand, negative divergence means higher cost of fall protection and is an indication of the bearish tendencies of traders.

According to the above data, bearish sentiment was last seen on January 10, when Bitcoin’s price fell by 15%. The move was followed by a sharp jump in Delta from 30% to 20%, when optimism reached 49 – a level we had not seen in the last 12 months.

When this indicator exceeds 20, it reflects the concerns of market makers and specialists about a possible price increase and is considered optimistic. On the other hand, the current range from 0 to 10, which has been since 20 January, is neutral.

While the expiration of $ 4 billion options can be disturbing, almost 74% of the options are actually considered worthless. As for the expiration on 29 January, the bulls are largely still in control due to the much larger adjusted open interest rate.

Source: CoinTelegraph