It's possible that the $2.25 billion in Friday expiration of Bitcoin options proves that bitcoin's bottom wasn't at $17,600

The price of Bitcoin was $20,000 before Christmas when the Bulls bet on BTC prices over $60,000 for the June monthly options expiration.

Bitcoin (BTC) has been trapped in a descending price pattern for the past week, and on June 16, it failed to break through $22,600. The second attempt at $21,400 on June 21 resulted in an 8% drop in value. After two unsuccessful breakouts, the price is now below $20,000 and generates doubt about whether $17,600 was truly the bottom.

The longer it takes for BTC to break out of this bearish pattern, the more entrenched the resistance line becomes and traders are paying close attention. That is precisely why this week’s $2.25 billion monthly options expiration is so crucial for bulls.

Cryptocurrency prices continue to be hampered by regulatory uncertainty, with European Central Bank (ECB) president Christine Lagarde reiterating her call for closer monitoring. On June 20, Lagarde addressed the issue of staking and lending in the industry:”[…] the lack of regulation is often covering fraud, completely illegitimate claims about valuation and very often speculation as well as criminal dealings.”

According to Arcane Research, publicly listed Bitcoin mining companies sold 100% of their bitcoin production in May, compared with the usual 20% to 40%, adding more downward pressure on the BTC price and data. Collectively, miners retain 800,000 BTC, raising concerns about a possible sell-off. Miners’ profitability was reduced by the Bitcoin price downturn since production costs have at times exceeded margins.

The June 24 options expiration will be particularly concerning to investors because Bitcoin downward momentum is expected to profit by $620 million by keeping BTC below $20,000.

The market for June 24 options is currently $2.25 billion in open interest, but the actual amount will be far lower owing to bearish bets from traders who were overly-optimistic. BTC tumbled beneath $28,000 on June 12th, but their monthly options expiry wagers exceed $60,000.

The $1.41 billion call (buy) open interest dominates the $830 million put (sell) open interest by a factor of 1.70, according to the June 24, 2020 expiration closing price of 20,908. The fact that Bitcoin is presently below $20,000 exacerbates this problem because most bullish bets will become worthless if it stays there for long.

If Bitcoin’s price remains under $21,000 at 8:00 am UTC on June 24th, just 2% of these call options will be available. This discrepancy occurs as a result of having a right to acquire Bitcoin at a price of $21,000 being meaningless if BTC drops below that level prior to expiration.

The following are the three most likely outcomes based on current price action. The number of Bitcoin option contracts available on June 24 for call (bull) and put (bear) instruments changes dependent on the expiry price:

• Between $18,000 and $20,000
• Between $20,000 and $22,000
• Between $22,000 and $24,000

Even so, this is a simple calculation that only considers put options utilized in bearish bets and call options used in neutral-to-bullish transactions. Even so, this simplification overlooks more complicated investment techniques.

For example, a trader may have sold a put option, gaining positive exposure to Bitcoin above a certain price but unfortunately there is no simple way to determine its influence.

On June 24, Bitcoin bears must push the price below $20,000 in order to earn a $620 million profit. On the other side, the bulls’ best-case scenario calls for a price increase of at least $22,000 to reduce the damage by $140 million.

Bulls had $500 million in leveraged long bets liquidated on June 12 and 13, so they should have less margin than is required to propel the price higher. Considering this information, bears have a higher chance of keeping Bitcoin under $22,000 before the June 24 options expiration.

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