Bitcoin experienced a brief surge above $25,000 on August 15, which was short-lived, followed by a 5% pullback within the next five hours. The resistance level proved more challenging than anticipated, potentially leading bulls to have false hope due to the upcoming $335 million weekly options expiry.
Investor optimism quickly switched back to a sellers’ market on August 17 as BTC dropped and tested the $23,300 support level. This negative movement happened just before the release of the Federal Open Markets Committee (FOMC) minutes from its July meeting, expected to provide insights on potential interest rate hikes by the Federal Reserve.
Further negative news emerged on August 16 when a U.S. federal court authorized the IRS to obtain transaction and customer identity details from cryptocurrency broker SFOX, following similar actions with other platforms between 2018 and 2021.
These factors led to confidence in a Bitcoin price above $25,000 on August 19 a few days ago, but recent developments have dimmed that outlook, possibly discouraging bullish bets.
Bears Caught Off Guard by BTC Rise Above $24,000
Despite the $335 million open interest for the August 19 options expiry, the actual amount will likely be lower as bears, who were overly optimistic, may need to readjust. Their bets extending down to $15,000 for the August expiry could be in jeopardy following recent price movements.
With a call-to-put ratio of 1.29, illustrating the difference between buy and sell options ($188 million vs. $147 million), most bullish bets may face risks with Bitcoin currently around $23,300.
If Bitcoin falls below $23,000 by 8:00 am UTC on August 19, only $1 million worth of these call options will be viable, rendering the right to buy Bitcoin at $23,000 worthless if BTC trades below that level at expiry.
Potential Upsides for Bulls, Yet $25,000 Remains a Challenge
Three probable scenarios based on the current price action reveal varying options contracts available on August 19 for both bullish and bearish instruments, influencing theoretical profits:
- Between $21,000 and $23,000: 30 calls vs. 2,770 puts, favoring bear instruments by $60 million.
- Between $23,000 and $25,000: 940 calls vs. 1,360 puts, balancing between bulls and bears.
- Between $25,000 and $26,000: 3,330 calls vs. 100 puts, favoring bull instruments by $80 million.
This simplified analysis compares put options in bearish bets and call options in neutral-to-bullish trades and overlooks more intricate investment strategies.
Bearish traders aim to keep Bitcoin below $23,000 to maximize gains, while bullish scenarios require BTC to exceed $25,000 to achieve profits. Bears may currently have an advantage following the liquidation of $144 million in leveraged futures long positions on August 16, potentially limiting the upward price movement.
