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Sunday, December 4, 2022

Here Is Why You Are Holding $20.8K Can Be Critical In $1B BTC Options Expiry

A failure of this level before this week’s $1 billion options expiry could result in considerably more downside since BTC bulls were liquidated during last week’s decline to $20,800.

Between August 15 and August 19, Bitcoin (BTC) underwent a 16.5% correction as it tried to test the $20,800 support. Although the decline is shocking, a $4,050 price difference is negligible, especially considering Bitcoin’s 72% annualized volatility.

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The S&P 500’s volatility is currently 31%, which is noticeably lower, but between June 8 and June 13, the index lost 9.1% of its value. Therefore, the index of significant U.S.-listed businesses experienced a more abrupt shift when corrected for the historical risk metric.

After the Chinese central bank was compelled to lower the prime rate for five-year loans on August 21 due to deteriorating real estate markets there, confidence among cryptocurrency investors deteriorated at the beginning of this week. Additionally, a strategist with the investment bank Goldman Sachs said that the U.S. Federal Reserve would tighten the economy even more due to inflationary pressure, which would hurt the S&P 500.

The Bullish Bets On BTC Is Well Above $22000: 

Only 12% of a call (buy) option for the month expiry have been placed above $22,000, which astonished bulls as to why Bitcoin had such a sharp drop after failing to breach the $25,000 resistance on August 15. Thus, despite placing fewer bets, Bitcoin bears are in a superior position.

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When employing the 1.25 call-to-put ratio, a broader perspective reveals greater bullish wagers due to the $560 million call (buy) open interest vs. the $450 million put (sell) options. However, most bullish bets will probably be useless because Bitcoin is now trading below $22,000.

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