Market Analysis

Bitcoin Price Making A Slow Recovery – Options Expiry Approaches On 23rd April.

The price of the leading cryptocurrency, Bitcoin [BTC] is making a slow recovery after facing a pointy 16% correction within the early hours of 18th April.

While some analysts blame a 9k BTC deposit at Binance, others focused on the hash rate drop caused by a coal mining accident in China. No matter the reason behind the $51,200 low, options market makers were forced to regulate their exposure.

Typically, arbitrage desks seek non-directional exposure, meaning that they’re indirectly depending on BTC moving in any particular direction. However, neutralizing options exposure usually requires a dynamic hedge, meaning positions must be adjusted consistent with Bitcoin’s price.

These arbitrage desks’ risk adjustments usually involve selling BTC when the market drops, which as a result, adds further pressure to long liquidations. Therefore, it is sensible to know the present level of risk as the 23rd April options expiry approaches. We’ll plan to dissect whether or not bears will enjoy a $50k BTC price or not.

Prior to the 18th April correction, BTC accumulated 74% gains in 3-months as it marked a $64,900 USD all-time high. Thus, it’s natural for investors to approach protective options more heavily.

While the neutral-to-bull call [buy] option offers the users with upside price protection, the other happens with the more bearish put [sell] options. By measuring each price level’s risk exposure, traders can gain insight into how bullish or bearish traders are positioned.

The total number of contracts set to expire on 23rd April totals 27,320 BTC, which is $1.55 Bln at the present $56,500 USD price. However, bears and bulls are apparently balanced as the call [buy] options total 45% of the open interest.

While the primary picture seems neutral, one must consider that the $64k call [buy] and better options are almost worthless, with less than 3-days left prior to expiry. A more bearish situation emerges when these 6,400 bullish contracts currently trading below $50 USD each are removed.

The neutral-to-bearish put options dominate with 70% of the remaining 19,930 BTC contracts. The open interest stands at $1.13 Bln considering the present Bitcoin price, and this offers the bears a $450 Mln advantage.

One can see that bulls were caught off-guard as Bitcoin retraced 13% after the 14th April all-time high. A meager 3k BTC call options are left below $58k, which is merely 24% of the entire

Also, the neutral-to-bearish put options amount to 9k BTC contracts at $55k and better strikes. This difference represents a $340 Mln open interest that favors bears.

As things currently stand, the expiries between $57k and $64k are reasonably balanced, which suggests that the bears have an incentive to stay the worth down on 23rd April.

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