Traders’ calls for a “mean reversion” and “relief rally” to $35,000 may be premature, according to noshitcoins’ analysis of derivatives data, pointing to another victory for bears.
Traders fear that worsening macroeconomic conditions could cause investors to seek shelter in the U.S. dollar and Treasuries. Japan’s industrial production data released on May 18 showed a 1.7% contraction year over year. Moreover, May 20 retail sales data from the United Kingdom showed a 4.9% decline versus 2021.to the inflation surge. Thus, traders increasingly seek shelter outside of riskier assets, which negatively impacts Bitcoin price.
If Bitcoin's price remains below $31,000 on May 27, bulls will only have $60 million worth of these call options available. This difference happens because there is no use in a right to buy Bitcoin at $31,000 if it trades below that level on expiry.Bears can secure a $390 million profit on May 27 Below are the three most likely scenarios based on the current price action. The number of options contracts available on May 27 for call and put instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:800 calls vs. 14,200 puts . The net result favors bears by $390 million.Between $32,000 and $33,000:This crude estimate considers the call options used in bullish bets and the put options exclusively in neutral-to-bearish trades.
For example, a trader could have sold a call option, effectively gaining negative exposure to Bitcoin above a specific price, but unfortunately, there's no easy way to estimate this effect. Bitcoin bears need to sustain the price below $30,000 on May 27 to profit $390 million from the monthly options expiry. On the other hand, bulls can reduce their loss by pushing BTC above $32,000, an 8% rally from the current $29,700 price. However, judging by the bearish macroeconomic conditions, bears seem better positioned for May 27 expiry.
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