The $18.6B monthly bitcoin options rally may begin at $75K
Main Receptors:
If the price fails to break above $71,000 by Friday, more than 90% of Bitcoin call options could be worthless.
Traders fear worsening inflation and credit conditions as the U.S.-Israeli-Iran war continues.
Bitcoin (BTC) has been stuck in a narrow range between $67,700 and $71,600 for the past week, closely tracking how US stock markets react to the US and Israel-Iran war. Traders have high hopes that the upcoming $18.6 billion monthly Bitcoin options could provide the momentum needed to break above the $75,000 level at Friday's close.
Bitcoin call (buy) options dominated March's total open interest, totaling $11.2 billion, while put (put) options were down 34 percent at $7.4 billion. However, this advantage is limited by the fact that Bitcoin has been unable to sustain levels above $74,000 for the past seven weeks. With WTI oil prices hovering above $90, investors fear inflation will remain a concern.
Bears of economic uncertainty help Bitcoin options expire every quarter.
The first signs of a crack in the US economy appeared after private credit funds restricted payments amid deteriorating credit quality. The $3 trillion sector has come under scrutiny in recent weeks after asset managers Ares Management, Apollo Global Management, Blue Owl Capital and Cliffwater were forced to halt or limit withdrawals, CNBC reported.
Uncertainty in the socio-economic situation may be exactly what Bitcoin's quarter end needs. Ahead of Friday's event at 8:00 a.m. UTC, analysts call for bids and options to better assess the forces driving Bitcoin's price.
Derbit holds a clear lead with 76 percent market share at $14.1 billion in open interest, followed by OKX at 7.1 percent and CME at 6.6 percent. Despite the high demand for call options, the bitcoin bulls at Deribit were overconfident and placed most of their bets at $90,000 and above.
Just $2 billion of Deribit's call options are sitting below $78,000, meaning 77% of the instruments will be worthless on Friday. It's clear that Bitcoin bulls didn't expect to end the quarter at $71,000, a price that wipes out 92% of the value of call options open interest.
Related: Bitcoin battle continues at $70k as data shows traders shunning bullish positions
A portion of those positions may have been held prior to February, when bitcoin traded above $86,000, which explains the difficult position above current price levels.
Open interest at $66,000 or more reached $2.2 billion on Deribit, meaning 40% of instruments remain in play by Friday's deadline. Therefore, at first glance, there is little benefit to the options, but a more granular view is needed to understand what the situation is.
Based on current price trends, below are four possible outcomes for BTC options on Deribit on Friday.
Between $65,000 and $69,000: The net result supports stored (sold) assets of $1.8 billion.
Between $69,001 and $72,000: The net result supports fixed (sold) assets of $950 million.
Between $ 72,001 and $ 75,000: The net result supports the stored (sold) equipment by $ 430 million.
Between $75,001 and $78,000: The net result supports call (purchase) instruments at $790 million.
Ultimately, Bitcoin bulls need a 6% rally from the current $70,900 level to swing the outcome of the March options expiration in their favor.
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