Key insights:
Bitcoin bears retain strong motivations below $114,000, likely amplifying pressure prior to options expiry.
Concerns over AI-sector spending introduce volatility, affecting investors’ overall risk appetite.
On August 29, $13.8 billion in Bitcoin (BTC) options are set to expire, an event many traders believe could indicate whether Bitcoin’s recent 9.7% correction signifies the end of its bull run or merely a short-lived pause. The price drop to $112,100 on Thursday marked Bitcoin’s lowest level in six weeks, heightening bearish momentum before the monthly options expiry.
Bullish Bitcoin strategies unprepared for sub-$114,000 prices
The open interest for call (buy) options stands at $7.44 billion, which is 17% higher than the $6.37 billion in put (sell) contracts. However, the actual results depend on Bitcoin’s price at 8:00 am UTC on August 29. Deribit leads the market with an 85% share, followed by CME at 7% and OKX at 3%.
Bulls may have been overly optimistic, placing bets at $125,000 or above. That optimism quickly diminished following Bitcoin’s drop, shifting momentum toward put instruments. Regardless of the reasoning behind the recent BTC price decline, traders who adopted bullish strategies are likely to be disappointed.
Only 12% of call options were placed at $115,000 or lower, leaving most out-of-the-money at current levels. In contrast, 21% of puts are positioned at $115,000 or higher, with significant clusters at $112,000. Therefore, it is reasonable to anticipate continued bearish pressure on Bitcoin’s price leading up to the monthly expiry.
It may be premature to declare bullish options strategies completely lost. Traders are awaiting remarks from US Federal Reserve Chair Jerome Powell on Friday, as any hint of increased odds for rate cuts could boost asset prices. An unexpected rise in US jobless claims data on Thursday heightened that anticipation, maintaining high macroeconomic uncertainty.
Related: Why is Bitcoin crashing and could $112K be the ultimate bottom?
US Federal Reserve and tech stocks may determine Bitcoin’s future
Below are five potential scenarios at Deribit based on current price movements. These outcomes predict theoretical gains based on open interest imbalances but exclude complex strategies, such as selling put options for upside price exposure.
Between $105,000 and $110,000: $210 million in calls (buy) vs. $2.66 billion in puts (sell). The net result favors puts by $2.45 billion.
Between $110,100 and $114,000: $420 million calls vs. $1.94 billion puts, favoring puts by $1.5 billion.
Between $114,100 and $116,000: $795 million calls vs. $1.15 billion puts, favoring puts by $360 million.
Between $116,100 and $118,000: $1.3 billion calls vs. $830 million puts, favoring calls by $460 million.
Between $118,100 and $120,000: $1.7 billion calls vs. $560 million puts, favoring calls by $1.1 billion.
For bullish strategies to gain ground, Bitcoin must trade above $116,000 by August 29. Nevertheless, the most crucial battle lies at $114,000, where bears are most driven to push prices downward.
Ultimately, Bitcoin’s outcome during the $13.8 billion monthly options expiry will be shaped by broader macroeconomic trends, including investor unease surrounding the artificial intelligence sector. Concerns intensified after Morgan Stanley cautioned that rising spending could hinder major tech firms’ capacity to fund share buybacks, increasing caution across equity markets.
This article is for informational purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
