Bitcoin (BTC) has been showing consistent higher lows over the past eight weeks but has struggled to turn the $24,000 resistance level into support. The upcoming $475 million Bitcoin options expiry on Aug. 12 could be a significant event for bullish market sentiment.
Factors like regulatory challenges, such as the recent SEC charges against a former Coinbase executive, and the turmoil in the Terra Classic ecosystem and Three Arrows Capital bankruptcy have been weighing on the market. Additionally, the suspension of user withdrawals by Hodlnaut has added to the cautious approach of traders.
External events, like Elon Musk selling Tesla stock and regulatory uncertainties affecting Coinbase, have also influenced investor sentiment. Most traders are refraining from making bullish bets above $24,000 due to these factors.
Bearish Bets and Options Outlook
The failure of Bitcoin to drop below $21,000 on July 27 surprised bearish traders as only a small percentage of put options are positioned above $23,000 for the Aug. 12 expiry date. This suggests that Bitcoin bulls may have an advantage in the upcoming options expiry.
Analyzing the call-to-put ratio, there are more bullish bets with a higher open interest for call options compared to put options. As Bitcoin is currently trading above $23,000, most bearish bets are likely to expire worthless.
If Bitcoin maintains its price above $23,000 by Aug. 12, only a small portion of put options will remain open, indicating a potential advantage for bulls.
Potential Profit Scenarios
Based on current price actions, various scenarios for call and put options contracts on Aug. 12 may result in profit imbalances. The estimated scenarios show potential results favoring either bulls or bears based on different price ranges.
Looking at the futures market, there is less inclination for bulls to push the price higher as recent liquidations of long futures positions amounting to $265 million have been observed. The most likely outcome for Aug. 12 falls within the $22,000 to $24,000 range, with a balanced outcome expected between bulls and bears.
Despite Bitcoin’s overall negative performance this year, even a modest win of $90 million for bulls could be seen as a victory if the price can be sustained above $24,000.
**Related:** Bitcoin’s response to US inflation data and potential impact on BTC price gains.
Conclusion
The upcoming Bitcoin options expiry and its impact on trading sentiment suggest a cautious approach from traders amid regulatory uncertainties and market challenges. Bulls and bears are positioning themselves based on different price ranges and option contracts, with potential profits or losses on the horizon depending on the outcome.
