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Even Though $2 Billion In Bitcoin Options Expire On Friday, Traders Are Keeping An Eye On $31,000

2023-07-28 15:51:21

While $2 billion in Bitcoin options are slated to expire on Friday, BTC traders are fixated on $31,000.


On July 28, $2 billion worth of monthly Bitcoin options will expire, possibly establishing $29,500 as a support level. Some contend that risky assets like cryptocurrencies suffered as a result of the recent rise in the United States Federal Reserve interest rate to 5.25%. Bulls on Bitcoin, however, contend that it takes time for the markets to fully respond to a tighter monetary policy.

Bitcoin Daily Price Movement During Expires. Source: TradingView

With Bitcoin having gained 22.2% between June 15 and June 23, it can be seen that the monthly expiry on June 30 did not result in much volatility. On the other hand, a 9% rally was started by the May monthly expiry, which caused Bitcoin's price to increase from $26,100 on May 25 to $28,450 on May 29. On the other hand, the April options expiry led to a 7% correction, with Bitcoin's price falling from $29,900 on April 27 to $27,800 on May 1. This information makes it quite evident that while the influence of option expiry requires some time to accumulate, it finally becomes very important for establishing patterns.

Regulation And The Momentum Of The ETF Are On The Bulls' Side

Numerous spot Bitcoin ETF requests have been made by some of the biggest fund managers in the world, including BlackRock and Fidelity. A U.S. House committee also adopted two proposals on July 26 that sought to define the differences between financial products and digital commodities.

The bullish trend in risk-on markets is further supported by the most recent strong corporate results. They support the notion that, at least temporarily, the likelihood of a recession is declining when combined with the most recent statistics on consumer confidence. First off, Meta Platforms announced 2Q revenues of $32 billion, above market expectations. Other businesses including McDonald's, Coca-Cola, Google, Johnson & Johnson, Morgan Stanley, and Novartis also posted results that were higher than expected. The U.S. Consumer Confidence Index increased from 110.1 in June to 117 in July, marking the indicator's highest level in two years.

Data Indicates That Bulls Were Overly Enthusiastic About The Price Of Bitcoin

$2 billion is the open interest for the options that expire on July 28. Nevertheless, as some bullish traders were anticipating prices of $31,000 or more, the actual number is projected to be lower. This overly upbeat attitude was caused by the price of Bitcoin trading above the barrier level from July 13 to July 24.

Bitcoin options aggregate open interest for July 28. Source: Deribit

The disparity between the $740 million in put (sell) options and the $1.3 billion in call open interest may be seen in the 0.56 put-to-call ratio. However, only $137 million worth of such call (purchase) options will be available if Bitcoin's price is still around $29,500 at 8:00 am UTC on July 28. This discrepancy arises from the fact that if BTC falls below that price at expiration, the right to purchase Bitcoin for $30,000 or $31,000 is meaningless.

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