In the past seven days, Bitcoin (BTC) has failed to break the $ 48,000 resistance, but its price has remained unchanged even as Minneapolis Federal Reserve Chairman Neel Kashkari beat up the industry.
Speaking at the annual summit of the Pacific Northwest Economic Region on August 17, Kashkari said:
“So far I’ve seen that […] 95% fraud, hype, noise and confusion. “
In addition, Kashkari was specifically targeting Bitcoin when he mentioned that its only use case was to fund illegal activities.
Despite the current withdrawal, Bitcoin investors should be glad the $ 44,000 support was held, as the Federal Reserve has also signaled its intention to unwind its monthly $ 120 billion purchases of government bonds and mortgage-backed securities.
Of course, with fewer incentives to support the markets, investors become more risk averse, which could have caused the price of Bitcoin to decline.
With that in mind, traders should be less concerned about the $ 600 million bitcoin options expiration on Friday, as if markets hold during potentially negative news it can be interpreted as bullish.
Bitcoin August 20th Options Aggregate Open Interest. Source: Bybt
The call-to-put ratio is currently 1.43 and favors the neutral to bullish call options. This data reflects the 7,838 Bitcoin call options versus the 5,465 put options.
Bulls appear confident in the $ 44,000 support
Currently there is less than 17 hours until Friday expires and there is a slim chance a $ 50,000 call option could be of use. This means that even if Bitcoin trades at $ 49,900 at 8:00 AM UTC on August 20th, those options will become worthless.
Therefore, the adjusted open interest for the neutral to bullish instruments after excluding the 3,700 ultra-bullish call options contracts over USD 50,000 is USD 190 million.
An expiration price below $ 48,000 reduces that number to $ 138 million. If the bears manage to keep Bitcoin trading below $ 46,000, only $ 67 million of those call options contracts will participate in the Friday expiration.
Eventually, the below $ 44,000 bull worst case scenario happens because it wipes out 83% of neutral to bullish call options to leave a meager $ 24 million open interest in their favor.
Related: Bitcoin slips with S&P 500 as the Fed signals that monthly bond purchases worth $ 120 billion are falling
Bears need a BTC price below $ 45,000 to make up for the situation
Bears appear to have been taken by surprise as 73% of protective put options were placed below $ 44,000. As a result, the instrument’s open interest would be reduced to $ 65 million if the Bitcoin expiration were above this threshold and this would bring a $ 41 million benefit.
By keeping Bitcoin price below $ 45,000, bears could practically balance open interest between call options and protective puts.
Ultimately, an expiry above $ 46,000 increases the bull’s edge to $ 105 million, which seems like a good reason to justify the increased buying pressure ahead of the Friday expiry.
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