Over the past seven days, Bitcoin (BTC) has failed to break through the $48,000 resistance, but its price has remained flat even as Minneapolis Federal Reserve Chairman Neel Kashkari bashed the industry.
During an appearance at the Pacific NorthWest Economic Region Annual Summit on Aug. 17, Kashkari said:
“So far, I have seen […] 95% confusion, hype, noise, and fraud.”
Kashkari also targeted Bitcoin specifically when he mentioned that it was used only for funding illegal activities.
Even with the current pullback, Bitcoin investors should be glad that the $44,000 support held because the Federal Reserve also signaled its intent to unwind its $120-billion monthly purchases of Treasury and mortgage-backed securities.
Investors become less risk-averse when there is less support for the markets. This could have led to a retracement of Bitcoin’s price.
Keep this in mind when trading Bitcoin options expiry Friday at $600 million. It is possible to interpret a market holding during potentially negative news as bullish.
At 1.43, the call-to–put ratio favors neutral-to–bullish call options. This data shows the 7,838 Bitcoin call options that are stacked against the 5,465 Put options.
Bulls are confident about the $44,000 support
There are only 17 hours left before Friday’s expiry and it is unlikely that a $50,000 call option will be used. These options are worthless if Bitcoin trades at $49,000.00 at 8:00 UTC on Aug. 20.
After excluding the 3,700 ultrabullish call option contracts above $50,000, the adjusted open rate for neutral-to-bullish instruments is $190 million.
This number drops to $138million if the expiry price is below $48,000 Only $67 million worth of these call option contract contracts will be available if Bitcoin trading is kept below $46,000 by bears.
The bull’s worst case scenario is below $44,000, when it eliminates 83% of neutral-to-bullish options and leaves a meager $24million open interest.
To balance the situation, bears require a BTC price lower than $45,000
The 73% of protective put options that bears have purchased have been below $44,000 seems to be a surprise. The instrument’s open interest will be reduced to $65million if Bitcoin expiry occurs above this threshold. This would give bears an advantage of $41 million.
Bears can keep Bitcoin’s price below $45,000 to maintain a balance between protective puts and call options.
An expiry price above $46,000 raises the bull’s advantage up to $105million, which seems like enough to justify increasing buying pressure before Friday’s expiry.
