Bears are attempting to keep bitcoin under $29K before the expiration of Friday's $640M in Bitcoin options

Over the previous nine days, Bitcoin’s (BTC) daily closing price fluctuated within a narrow band of $28,700 and $31,300. The May 12 collapse of TerraUSD (UST), which was formerly the world’s third-largest stablecoin by market capitalization, harmed investor confidence and cast doubt over Bitcoin’ s future price recovery after the Nasdaq Composite Stock Market Index fell 4.7% on May 18.

On May 18, Target (TG) stock fell 25% in two days, while Walmart (WMT) plummeted 17%, as disappointing quarterly results from top United States vendors fueled recession worries. The S&P 500 Index came close to reaching bear market territory as a result of the possibility of an economic downturn, with a 20% decline from its all-time high.

Also, the recent crypto price dip has been costly for leverage investors (longs) to bear. According To Coinglass, between May 15 and 18, total liquidations at derivatives exchanges reached $457 million.

The open interest for the May 20 options expiration is $640 million, but the actual quantity will be far lower owing to overly optimistic investors. Bitcoin’s recent slump beneath $32,000 caught traders off guard, and just 20% of the call (buy) options on May 20 have been purchased at or below that price.

The 0.66 call-to-put ratio reflects the dominance of the $385 million put (sell) open interest against the $255 million call (buy) options, suggesting that bears have an edge.

At 8:00 a.m. UTC on May 20, only $160 million worth of these put (sell) options will be accessible if Bitcoin’s price stays above $29,000. This is due to the fact that a right to sell Bitcoin at $30,000 is meaningless if BTC rises above that level before expiry.

The three most likely scenarios based on the current price action are as follows. The number of call (bull) and put (bear) options contracts available on May 20, depending on the expiry price, is as follows:

• Between $28,000 and $29,000: 300 calls vs. 7100 puts. Bears win by $190 million in this scenario.
• Between $29,000 and $30,000: 600 calls vs. 5500 puts. Bears win by $140 million in this scenario.
• Between $30,000 and $32,000: 1 750 calls vs 3 700 puts. Put (bear) instruments win by approximately$60 million in this situation.

The simple calculation assumes that all put options are utilized in bearish bets and all call options in neutral-to-bullish transactions. Even so, this simplification overlooks more complex investment techniques. A trader may have sold a put option, gaining positive Bitcoin exposure above a particular price but there’s no straightforward method to account for this.

Between May 15 and 18, Bitcoin bears had $457 million in leveraged long positions liquidated, leaving them with less margin to push the price higher. As a result, prior to the May 20 options expiration, bears will attempt to keep BTC below $29,000 in order to limit the likelihood of a short-term price recovery.

If you have been trading in Cryptocurrencies, it is important that you declare any profits or losses to the Australian Tax Office. The Crypto Tax Calculator Australia takes the hassle out of calculating tax owed on Crypto transactions. The calculator is easy to use and can help take the hassle out of the calculations. So why not try it today?